Publication: Journal of Economic Education
Volume: Volume 25, No. 3
Issue: Summer 1994
Pages: pp. 251-260
Author(s): Alan Day Haight (Bowling Green State University)
Address (Principal Author):Alan Day Haight, Department of Economics, Bowling Green State University, Bowling Green, OH 43403-0268 (419) 372-8111
Internet Address (Principal Author):
Title: The IC-OV Diagram: A Supplement to Isoquants for Teaching Trade Theory
Abstract: Many basic propositions of trade theory, such as factor price equalization and Stolper-Samuelson magnification, are customarily illustrated with unit value isoquants; but such theorems can also be proved using vertical slices of the production function surfaces. The vertical slice diagram developed here depicts "input cost and output value" (IC-OV). It is a multisector version of Solow's well-known diagram of economic growth. After this basic apparatus has been introduced to a class, one can occasionally challenge the students to invent on their own the vertical-slice analogy to the isoquant proof given in lecture that day.