ABSTRACT
The distinguishing characteristic of input-output type of model, at least insofar as production is concerned, is the assumption that inputs can be used only in fixed combinations with one another, without the degree of substitutability usually assumed in orthodox models. The mode of production varies less among industries at the same level than between industries at different levels. Indeed, at each level, the key to production is a different type of input. In the primary sector of the economy, the key to production lies in the nature of the land, or natural resource, inputs. To develop a model of the enterprise sector that can be used to explain not only the level of production in each industry but also price movements, it is essential that we be able to break the value figures down into their price and quantity components. The material inputs used in the production process can be reduced to an even more basic set of inputs.
