Along the contract curve _____.
A)every point is equitable
B)two individuals have equal marginal rates of substitution
C)any trade that benefits one person will necessarily benefit the other
D)indifference curves of consumers are intersecting

Question

Quizplus · Accepted Answer

Along the contract curve, two individuals have equal marginal rates of substitution, meaning that the ratio of the willingness of one individual to trade one good for another is equal to the ratio of the willingness of the other individual to trade the same goods. This reflects efficient trade and optimal resource allocation between the two individuals involved in the exchange. Options A, C, and D are incorrect as they do not accurately describe the contract curve.

Along the Contract Curve _____