In free exchange among two individuals the position on the contract curve finally arrived at will,among other things,depend on: Which of these correctly completes the statement?
I.The bargaining strength of each individual.
II.The initial endowments of the individuals.
III.The individuals' preferences.
A)Only III.
B)Only II.
C)I and III,but not II.
D)II and III,but not I.
E)I,II,and III.

Question

Quizplus · Accepted Answer

All three factors mentioned - bargaining strength, initial endowments, and preferences - can affect the position on the contract curve in a free exchange between two individuals. The bargaining strength of each individual can influence the terms of the exchange and result in a position on the contract curve that is favorable to one party. The initial endowments of each individual can determine the starting point for the exchange and what they have to offer, which can impact the final outcome. Finally, the preferences of each individual can affect what they are willing to trade and what they value, which can also influence the position on the contract curve. Therefore, all three factors are relevant and should be considered in determining the final position on the contract curve.

In Free Exchange Among Two Individuals the Position on the Contract