In an Edgeworth Box, All Points of Efficiency Occur at the

question 87

Multiple Choice

In an Edgeworth box, all points of efficiency occur at the

• A) intersections of the indifference curves.
• B) the points of tangency between the sets of indifference curves.
• C) in the midpoint of the diagram.
• D) at any point other than the intersections of the indifference curves.

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Definitions:

Actual Production

The total quantity of goods and services produced by an economy or firm at any given time, reflecting real output.

Diagram

A simplified drawing showing the appearance, structure, or workings of something; a schematic representation.

Allocative Efficiency

A state of the economy in which production represents consumer preferences; every good or service is produced up to the point where the last unit provides a benefit to consumers equal to the cost of producing it.

Producer Surplus

The variance between the price producers are willing to take for a good or service and the price they end up receiving.