. Suppose an economy consists of 5,

. Suppose an economy consists of 5,000 firms and 10,000 households. There is no
government and no foreign trade. Each household has a single worker and each
firm has a single machine. In each period of time, say a week, a given machine
requires exactly two workers to produce a litre of milk…consumption good that is then sold to the household. This is the only consumption good in the economy. Suppose each worker is paid £50 per week for supplying labour. There is no investment or savings in this economy.