A move from one point on a contract curve to another point on the contract curve will make:
A) both individuals better off.
B) both individuals worse off.
C) one individual better off and the other individual worse off.
D) the goods more expensive.

Question

Quizplus · Accepted Answer

A contract curve represents the set of points where the marginal rates of substitution of two individuals (or parties) are equal, indicating efficient allocations of goods between them. Moving along the contract curve changes the allocation of goods between the individuals, making one better off and the other worse off, as the total resources are constant and being reallocated.

A Move from One Point on a Contract Curve to Another