Consider the Edgeworth Box illustrated in the figure to the right. I and I are individual j's indifference curves and I and I are individual d's indifference curves. Bundle e represents the initial endowment. Explain why point e in the figure to the right is not on the contract curve. Bundle e is not on the contract curve because Contraçt curve O A. the consumers' marginal rates of substitution are equal at bundle e. O B. both consumers can be made better off if consumer j trades wood for candy with consumer d. O C. the consumers' indifference curves are tangent at bundle e. O D. one party cannot be made better off without harming the other from trade. O E. both consumers can be made better off if consumer j trades candy for wood with consumer d. Candy

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Consider the Edgeworth Box illustrated in the figure to the right. I and I, are individual j's indifference curves
and I, and are individual d's indifference curves. Bundle e represents the initial endowment.
Explain why point e in the figure to the right is not on the contract curve.
Bundle e is not on the contract curve because
Contract curve
O A. the consumers' marginal rates of substitution are equal at bundle e.
O B. both consumers can be made better off if consumerj trades wood for candy with consumer d.
O C. the consumers' indifference curves are tangent at bundle e.
O D. one party cannot be made better off without harming the other from trade.
O E. both consumers can be made better off if consumer i trades candy for wood with consumer d.
e
Candy
Transcribed Image Text:Consider the Edgeworth Box illustrated in the figure to the right. I and I, are individual j's indifference curves and I, and are individual d's indifference curves. Bundle e represents the initial endowment. Explain why point e in the figure to the right is not on the contract curve. Bundle e is not on the contract curve because Contract curve O A. the consumers' marginal rates of substitution are equal at bundle e. O B. both consumers can be made better off if consumerj trades wood for candy with consumer d. O C. the consumers' indifference curves are tangent at bundle e. O D. one party cannot be made better off without harming the other from trade. O E. both consumers can be made better off if consumer i trades candy for wood with consumer d. e Candy
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