Which of the following is true of the contract curve?
A)The contract curve is an enforceable agreement between parties to an exchange.
B)The contract curve designates the potential trade possibilities along an indifference curve.
C)The contract curve delineates all Pareto efficient allocations in an Edgeworth box.
D)The contract curve defines the equitable exchanges anywhere in an Edgeworth box.

Question

Quizplus · Accepted Answer

The contract curve represents all Pareto efficient allocations, i.e., allocations where no one can be made better off without making someone else worse off, in an Edgeworth box. It does not necessarily represent enforceable agreements or equitable exchanges, and it is not directly related to indifference curves.

Which of the Following Is True of the Contract Curve