In an Edgeworth box the line through all of the points that represent efficient allocations of two goods is called
A)the core.
B)the contract curve.
C)the efficiency curve.
D)the Pareto curve.

Question

Quizplus · Accepted Answer

The line through all of the points that represent efficient allocations of two goods is called the contract curve. This curve represents all possible Pareto-efficient allocations, where one individual cannot be made better off without making the other individual worse off. The core refers to a subset of allocations on the contract curve where no coalition of individuals can be better off by deviating from the allocation. The efficiency curve and Pareto curve are not used to describe the line through efficient allocations. The contract curve is the line through all of the points that represent efficient allocations of two goods. The other options are incorrect: 
A) The core refers to a subset of the contract curve which is stable under certain conditions of bargaining power. 
C) There is no such thing as an "efficiency curve" in an Edgeworth box. 
D) While the contract curve is often referred to as the "Pareto frontier," the term "Pareto curve" is not commonly used in this context.

In an Edgeworth Box the Line Through All of the Points