The allocations on the contract curve are Pareto

Question

Quizplus · Accepted Answer

Allocations on the contract curve are efficient, meaning that no other allocation could make anyone better off without making someone else worse off. Allocating resources in an efficient manner is desirable from an economic perspective, and therefore choice B is the best option. Choice A is incorrect because Pareto indifference means that two or more allocations are equally preferable to an individual, and does not necessarily imply efficiency. Choice C is incorrect because interventions may change the allocation of resources, but may not necessarily lead to an efficient outcome.

The Allocations on the Contract Curve Are Pareto