If One Is on the Contract Curve

question 42

Multiple Choice

If one is on the contract curve

• A)the allocation is not Pareto optimal.
• B)the indifference curves of both consumers are crossing.
• C)no further voluntary trade will occur.
• D)further beneficial trades can occur.

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Definitions:

Market Power

The ability of a firm or group of firms to influence the price of goods or services in a market.

Influence

The capacity to have an effect on the character, development, or behavior of someone or something.

Perfectly Competitive Market

A market structure characterized by a large number of buyers and sellers, homogeneous products, and easy entry and exit, leading to price-taking behavior.

Variable Costs

Costs that vary directly with the level of output or business activity, such as materials and labor.