In the Edgeworth box diagram for production,
A) a point off the "contract curve" (or "production efficiency locus") cannot have more Production of one of the goods than can some point on the curve.
B) a point off the "contract curve" (or "production efficiency locus") can involve more Production of both goods than can any point on the curve.
C) a movement from autarky to trade can be associated with a movement along the "contract curve" (or "production efficiency locus').
D) the "contract curve" (or "production efficiency locus") will always be the "diagonal"Of the box.

Question

Quizplus · Accepted Answer

The "contract curve" or "production efficiency locus" in an Edgeworth box diagram for production represents the set of all efficient allocations of resources between two producers. A movement from autarky (where entities are self-sufficient) to trade can indeed be associated with a movement along the contract curve, as trade allows for specialization according to comparative advantage, leading to a more efficient allocation of resources.

In the Edgeworth Box Diagram for Production