In an Edgeworth box diagram,which of the following statements is incorrect?
A)A point of tangency between two indifference curves identifies the uniquely best distribution of goods between consumers.
B)It is possible to move from an inefficient point to an efficient point in a way that makes one consumer better off and the other no worse off.
C)Some inefficient distributions of the good may be preferred to some efficient distributions on equity grounds.
D)It is possible to move from a point off the contract curve to a point on the contract curve and make both consumers better off.

Question

Quizplus · Accepted Answer

A point of tangency between two indifference curves does not necessarily identify the uniquely best distribution of goods between consumers. It indicates an efficient distribution where no one can be made better off without making someone else worse off, but it does not account for the equity or fairness of the distribution, nor does it ensure it's the best in terms of overall welfare. Multiple tangency points can exist, each representing different distributions of goods.

In an Edgeworth Box Diagram,which of the Following Statements Is