The accompanying diagram shows an Edgeworth box economy. The initial endowment is point O. At current relative prices, Augie chooses point X and Bev chooses point Y

-Refer to Edgeworth Box Economy.In an Edgeworth box,a point where two indifference curves are tangent represents

Question

The accompanying diagram shows an Edgeworth box economy. The initial endowment is point O. At current relative prices, Augie chooses point X and Bev chooses point Y

-Refer to Edgeworth Box Economy.In an Edgeworth box,a point where two indifference curves are tangent represents

Quizplus · Accepted Answer

In an Edgeworth box, a point where two indifference curves are tangent represents a Pareto-optimal allocation, meaning that no reallocation can make one consumer better off without making the other worse off.

The Accompanying Diagram Shows an Edgeworth Box Economy