In an Edgeworth production box diagram,if two isoquants intersect,it means that:
A)the well-being of the two consumers can be improved without changing the output of either good.
B)the marginal rate of substitution between consumers does not equal the marginal rate of technical substitution.
C)by allocating inputs differently between firms,output can be increased at no additional cost.
D)consumers are not facing the same output price ratio.

Question

Quizplus · Accepted Answer

In an Edgeworth production box diagram, if two isoquants intersect, it implies that the current allocation of inputs between firms is not efficient. By reallocating inputs between the firms, it is possible to increase the output of at least one firm without reducing the output of the other, thus increasing overall production at no additional cost. This does not directly relate to consumer well-being, marginal rates of substitution, or output price ratios, but rather to the efficiency of input allocation between producers.

In an Edgeworth Production Box Diagram,if Two Isoquants Intersect,it Means