When comparing point A, which lies within a utilities possibilities frontier, with point B, which lies on the same utilities possibilities frontier,
A) both A and B are efficient.
B) both A and B are equitable.
C) both A and B may be equitable.
D) neither A nor B could be efficient.

Question

Quizplus · Accepted Answer

Points within or on the utilities possibilities frontier can be equitable, but efficiency is only guaranteed at points on the frontier. Point A, being inside the frontier, is not efficient, while point B, on the frontier, is efficient. Equity depends on the distribution, not the efficiency or position relative to the frontier.

When Comparing Point A, Which Lies Within a Utilities Possibilities