Which of the following is true of an efficient distribution of two goods among two individuals?
A)The efficient distribution of goods is represented by a point off the contract curve.
B)The individuals' marginal rates of substitution are not equal at an efficient distribution of goods.
C)If the distribution of two goods is efficient,one person can be made better off without harming the other.
D)The point of tangency between two indifference curves shows an efficient distribution of goods.

Question

Quizplus · Accepted Answer

The point of tangency between two individuals' indifference curves represents an efficient distribution of goods. At this point, the individuals' marginal rates of substitution are equal, and it is not possible to make one person better off without making the other worse off. Therefore, option D is the correct answer. Options A, B, and C are incorrect because they do not accurately describe an efficient distribution of goods.

Which of the Following Is True of an Efficient Distribution