a Standard model of a Trading Economy Relative Prices and demand The value of an economy' s consumption equals the value of its production PcOc+ PFOF=PCDc+PDF=v The economys choice of a point on the isovalue line depends on the tastes of its consumers, which can be represented graphically by a series of indifference curves Copyright C 2003 Pearson Education, Inc Slide 5-9Copyright © 2003 Pearson Education, Inc. Slide 5-9 ▪ Relative Prices and Demand • The value of an economy's consumption equals the value of its production: PCQC + PFQF = PCDC + PFDF = V • The economy’s choice of a point on the isovalue line depends on the tastes of its consumers, which can be represented graphically by a series of indifference curves. A Standard Model of a Trading Economy