On the consumption contract curve

Question

Quizplus · Accepted Answer

All three statements are true on the consumption contract curve. The supply of goods is equal to the demand of goods for both parties, meaning they have reached a mutually beneficial agreement. All allocations (points on the curve) are Pareto optimal, meaning there is no way to make one party better off without making the other party worse off. Finally, there are no further voluntary exchanges possible since they have already reached the best possible agreement.

On the Consumption Contract Curve