Identify the truthfulness of the following statements.
I. The contract curve must contain the initial endowment point.
IIز All points on the contract curve are economically efficient.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Question

Identify the truthfulness of the following statements. 
I. The contract curve must contain the initial endowment point.
IIز All points on the contract curve are economically efficient.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Quizplus · Accepted Answer

The contract curve represents all allocations that are Pareto efficient, meaning no one can be made better off without making someone else worse off. The initial endowment point does not necessarily have to be on the contract curve.

Identify the Truthfulness of the Following Statements