In a many- person exchange economy, given all the relevant assumptions, an allocation is Pareto- optimal if:
A)it does not belong to the contract curve.
B)there are allocation strictly preferred by all persons.
C)the MRS are identical for all individuals.
D)the indifference curves are not tangent in that point.

Question

Quizplus · Accepted Answer

An allocation is Pareto-optimal if no individual can be made better off without making someone else worse off. This occurs when the marginal rate of substitution (MRS) is identical for all individuals, indicating that resources cannot be reallocated to make someone better off without harming another.

In a Many- Person Exchange Economy, Given All the Relevant