Which of the following statements about the welfare frontier is incorrect?
A)Some of the points on the welfare frontier are efficient.
B)The welfare frontier is downward sloping.
C)Any point on the welfare frontier is preferred to any point inside it.
D)the marginal rate of substitution [MRS] is equal to the marginal rate of transformation [MRT] at all points on the welfare frontier.

Question

Quizplus · Accepted Answer

The statement that the MRS is equal to the MRT at all points on the welfare frontier is incorrect. The MRS measures the willingness of a consumer to trade one good for another, while the MRT measures the amount of one good that must be given up to produce an additional unit of another good. These two concepts are not necessarily equal at every point on the welfare frontier, but they are equal only at the point of tangency between the frontier and an indifference curve.

Which of the Following Statements About the Welfare Frontier Is