All points on the contract curve are economically efficient.

Question

Quizplus · Accepted Answer

The contract curve represents all possible Pareto-efficient allocations of resources between two parties. Any point on the curve maximizes the utility of both parties given their individual preferences and constraints. Therefore, all points on the contract curve are economically efficient. The contract curve represents the set of Pareto-efficient allocations where no individual can be made better off without making someone else worse off. Hence, all points on the contract curve are economically efficient.

All Points on the Contract Curve Are Economically Efficient