<p>$p$ represents total production.</p>

<p>$Ap$ represents the intermediate goods and services used in production, i.e. intermediate consumption.</p>

<p>So $p-Ap=(I-A)p$ represents net production, i.e. output minus input.</p>

CC BY-SA 3.0
2016-08-16T07:55:10.243Z
2016-08-16T07:55:10.243Z
Henry
<p>I am watching this video about the Leontief input-output model: <a href="https://youtu.be/hlaBURtSDO8?t=12m26s" rel="nofollow">https://youtu.be/hlaBURtSDO8?t=12m26s</a></p>

<p>One thing I don't understand is: why not use $Ap - p$ instead of $p - Ap$? It seems to make better sense to measure net production by output - input. Maybe I am missing something?</p>

CC BY-SA 3.0
2016-08-14T11:53:35.970Z
Please include all the relevant information in the body of the question so we don't have to watch the video. This way the question stays even after the video is moved and the link dies.
Giskard
<consumption><leontief>
why not use $Ap - p$ instead of $p - Ap$?
qed
# why not use $Ap - p$ instead of $p - Ap$?

(Asked by: username_0 on 2016-08-14)

I am watching this video about the Leontief input-output model: <https://youtu.be/hlaBURtSDO8?t=12m26s>

One thing I don't understand is: why not use $Ap - p$ instead of $p - Ap$? It seems to make better sense to measure net production by output - input. Maybe I am missing something?

**Tags:** consumption, leontief
> **Comments:**
> **username_1**: Please include all the relevant information in the body of the question so we don't have to watch the video. This way the question stays even after the video is moved and the link dies.  

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## 1 answers

### Answer by username_2 on 2016-08-16. Score: 2

$p$ represents total production.

$Ap$ represents the intermediate goods and services used in production, i.e. intermediate consumption.

So $p-Ap=(I-A)p$ represents net production, i.e. output minus input.


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