The Automobile Market, with No Trade and with Free Trade
(Figure 5.4)

The unit cost curve UC shows the relationship between the unit (or average) cost level for each variety and the number of varieties produced. Press "Show UC1" to show the unit cost curve without trade. Given the size of the market, unit cost increases as the number of varieties increases, because the production level for each variety declines as more varieties crowd into the market. The UC curve keeps track of the entire market by focusing on the number of varieties, and using this to infer the cost level achieved by each individual firm.
Press "Continue" when you are ready to move on. The "Reset" button will clear the graph.