Which of the following describes the equilibrium in an Edgeworth box?
A)Any point where the indifference curves of the two individuals intersect
B)All points that show an equal distribution of the two goods between the two individuals
C)Any point inside the box representing scope for mutually beneficial trade.
D)A point of tangency between the indifference curves of the two individuals.

Question

Quizplus · Accepted Answer

Equilibrium in an Edgeworth box occurs at a point of tangency between the indifference curves of the two individuals. This represents the allocation of goods where neither individual can be made better off without making the other person worse off. Therefore, it is the point of maximum joint utility. Choices A, B, and C are incorrect as they do not fully capture the concept of equilibrium in an Edgeworth box.

Which of the Following Describes the Equilibrium in an Edgeworth