Economics · General Equilibrium Theory
In a pure exchange economy, the Edgeworth box equilibrium is Pareto optimal when:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Prices of all goods are equalised
- 2The indifference curves of both consumers are tangent to each other✓
- 3Both consumers are on their highest indifference curves
- 4Budget lines of both consumers coincide
Correct answer
The indifference curves of both consumers are tangent to each other
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