Finance:Isovalue lines
From HandWiki
In microeconomics, in a standard trade model with two products, an isovalue line is the vector of combinations for which the market value of total production is constant.[1][2] The formula for isovalue line V is:
in which:
Q is quantity
P is price
x and y are products.
For example: Assume an economy that only produces bread and wine and in which relative prices are fixed, say one bottle of wine equals the price of three breads. The isovalue line V (in a graph with bread as x and wine as y) slopes less than 45° downward. The exact slope is derived from the wine/bread price relation, in this case -1/3.
References
- ↑ Fernández, Èric Roca (2019-07-11). "The Standard Trade Model" (in en-us). https://eric-roca.github.io/courses/international_trade/standard_trade_model/.
- ↑ "Econ 325 - The Standard Trade Model". http://qed.econ.queensu.ca/pub/faculty/lewb/325_LecStandard.html.
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