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What does the slope of the utilities possibility frontier indicate?

What does the slope of the utilities possibility frontier indicate?

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Answer #1

Utilities possibility frontier also known as utility possibility curve. The graph shows the maximum amount of one persons utility given level of utility attained by all the others in society.

The UPF slope represents all allocations that are efficient and shows the level of satisfaction that each person achieves when he has traded to an efficient outcome on the contract curve.

  • UPF is a locus of point that joint together alternative combinations of utility received by individual like A and B.
  • Any point inside the utility possibilities frontier is inefficient. At point A, both A's and B's could be better off.
  • both point B and C are efficient , but may not be equally desirable.
  • At point P - A's has zero utility
  • At point P'- B's has zero utility
  • B and C point on contract curve.
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