Which of the Following Is True of the Contract Curve

question 26

Multiple Choice

Which of the following is true of the contract curve?

• A)All points on the contract curve are potential points of equilibrium but not all are efficient.
• B)All points on the contract curve are potential points of equilibrium and are efficient.
• C)A movement from one point on the contract curve to another reduces total welfare.
• D)The midpoint of the contract curve is the most efficient point because it is the most equitable.

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Definitions:

Price Elasticity of Supply

A measure of how much the quantity supplied of a good changes in response to a change in the price of that good, indicating the responsiveness of producers.

Midpoint Method

A formula used in economics to calculate the elasticity of a good or service, offering a more accurate measurement by averaging the starting and ending points.

Price Elasticity of Supply

An indicator of the extent to which the supply of a product reacts to a shift in its price.

Midpoint Method

A technique utilized in economics to calculate the percentage change between two values, minimizing the distortion from the choice of base value by using the average of the initial and final values as the base.