(M8E5) [Microeconomics] How to Find Pareto Efficient Allocations and Contract Curve

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[@Christina-bp6qg]

Now how do u find the function if the contract curve, isoquants and equilibrium are lready known

[@juancruzhernandez8687]

The contract curve is not the same as the set of PO allocations. The black line represents the entire set of PO allocations. The contract curve is a part of that line, specifically the PO allocations that could be reached through trade starting from the initial endowment, and these typically improve both individuals compared to autarky.

[@selcukozyurt]

Some define contract curve in the same way you define. However, most textbooks (including the ones I follow in my courses, e.g., Varian) define contract curve as the set of all Pareto efficient allocations. The set of allocations that you call “contract curve” is in fact nothing but the “core” of an exchange economy. Anyways, getting into a discussion about semantics is not fruitful. The true definition is always the one that your instructor or textbook uses. So, if your instructor uses this definition, then you should go for it. Hope that helps…