One useful way to keep track of two markets at once is to focus not just on the quantities of cheese and wine supplied and demanded but also on the relative supply and demand, that is, on the number of pounds of cheese supplied or demanded divided by the number of gallons of wine supplied of demanded.
Figure 2-3 shows world supply and demand for cheese relative to wine as functions of the price of cheese relative to that of wine. The relative demand curve is indicated by RD; the relative supply curve is indicated by RS. World general equilibrium requires that relative supply equal relative demand, and thus the world relative price is determined by the interaction of RD and RS.
The striking feature of figure 2-3 is the fanny shape of the relative supply curve RS: a step with flat sections linked by a vertical section. Once we understand the derivation of the RS curve, we will be almost home – free in understanding the whole model.