In an Edgeworth box, all points of efficiency occur at the
A) intersections of the indifference curves.
B) the points of tangency between the sets of indifference curves.
C) in the midpoint of the diagram.
D) at any point other than the intersections of the indifference curves.

Question

Quizplus · Accepted Answer

Points of efficiency occur at the points of tangency between the sets of indifference curves, where the MRS (marginal rate of substitution) of one individual is equal to the MRS of the other individual. This represents a situation where no further gains from trade can be achieved without making at least one person worse off.

In an Edgeworth Box, All Points of Efficiency Occur at the