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Unformatted text preview: countries two industries Factors will receive the same payments across industries. 5 Indifference Curves cannot cross 6 C Example U=C*T; C=20, T=5; so C,T=20,5 U=20*5 = 100 Everywhere on this indifference curve, U=100 Another point would be C,T = 4,25 and C,T=5,20 What is the slope between C=4 and C=5? If C=4 then T=25 and if C=5, T=20 (2520)/(45) = 5/1 = 5 Slope between C=19 and C=20? At C=19, T = (100/19)=5.26 7 Budget Constraint (line) P c C + P t T = M M is income Solve for T (vertical axis) P t T= M  P c C T = M/ P t  (P c /P t ) C Slope relative price of C! 8 Autarky: Constant Op. Cost 9 C Autarky: Increasing Op. Cost 10 C...
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 Fall '06
 YAVAS,CEMILEPAN,LU
 Unemployment

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