Asked by jessica tudosa on May 26, 2024
Verified
Refer to Figure 16.2.1 above. The curve that connects points E, F, and G is called:
A) the contract curve.
B) the utility possibilities frontier.
C) the production possibilities frontier.
D) the production contract curve.
Contract Curve
Curve showing all efficient allocations of goods between two consumers, or of two inputs between two production functions.
Utility Possibilities Frontier
Curve showing all efficient allocations of resources measured in terms of the utility levels of two individuals.
Production Possibilities Frontier
Curve showing the combinations of two goods that can be produced with fixed quantities of inputs.
- Identify efficient allocations of goods in exchange economies using the Edgeworth box and contract curve.
Verified Answer
AV
Arvind vermaMay 31, 2024
Final Answer :
A
Explanation :
The curve that connects points E, F, and G is called the contract curve, which represents the set of allocations that both parties prefer to their initial endowments. The utility possibilities frontier and production possibilities frontier are different types of curves that represent different aspects of economic activity. The production contract curve is not a commonly used term in economics.
Learning Objectives
- Identify efficient allocations of goods in exchange economies using the Edgeworth box and contract curve.