All possible efficient allocations of 2 goods between 2 people are located on:
A) the indifference curve.
B) the contract curve.
C) the production possibilities frontier.
D) the budget line.

Question

Quizplus · Accepted Answer

The contract curve represents the set of all efficient allocations that maximize both individuals' utility given their preferences and endowments. Any point on the contract curve cannot be improved upon without making one individual worse off. Therefore, the best choice would be from the set of efficient allocations on the contract curve.

All Possible Efficient Allocations of 2 Goods Between 2 People