Which of the following is true of contract curves?
A)Every point on the contract curve indicates an inefficient distribution of goods among consumers.
B)At any point on the contract curve,all the consumers have equal marginal rates of substitution.
C)A movement along the contract curve indicates that,any trade that benefits one person will necessarily benefit the other.
D)At every point on the contract curve,the marginal utility derived from the consumption of a good is identical for all the consumers.

Question

Quizplus · Accepted Answer

At any point on the contract curve, all the consumers have equal marginal rates of substitution. This means that each consumer is willing to give up the same amount of one good to obtain more of the other good, which leads to an efficient distribution of goods. The other options are false as inefficiency, trade, and identical marginal utility are not guaranteed at every point on the contract curve.

Which of the Following Is True of Contract Curves