If each of the two players represented in an Edgeworth box has Cobb-Douglas indifference curves, then the contract curve will be

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The question asks: If each of the two players represented in an Edgeworth box has Cobb-Douglas indifference curves, then the contract curve will be...

Because the answer options are not provided in the input, we cannot evaluate alternatives directly. Instead, I will explain the standard concept and then connect it to the single provided correct-answer statement.

Key idea: The contract curve in an Edgeworth box consists of all allocations where the two players’ marginal rates of substitution (MRS) are equal, i.e., where the indifference curves are tangent to each other. This tangency condition is what characterizes efficient allocations given the endowments and preferences. With strictly convex indifference curves, any tangency corresponds to an efficient allocation.

Cobb-Douglas preferences have properties that reinforce the tangency characterization: they yield smoothly curved, strictly convex indifference curves with well-defined MRS that changes continuously along the curves. Therefore, the contract curve for two players with Cobb-Douglas preferences is precisely the set of allocations where their indifference curves touch at a single common tangency point (i.e., where MRS1 = MRS2).

Now, analyzing a statement that could be offered as the correct description: 
- If the statement is that the contract curve is the series of tangency points where the two players’ indifference curves have one point in common, this aligns with the standard definition of the contract curve as the locus of tangencies between the two agents’ indifference curves. The phrasing emphasizes a single tangency point per allocation, which is the characteristic of a tangency between two convex curves.

If there were alternative options (not provided here) like claims that the contract curve is a straight line in the Edgeworth box, or that it consists of non-tangent intersections, those would typically be incorrect for Cobb-Douglas preferences, since the contract curve follows from the equalization of MRS and tangency, not from intersections or non-tangent overlaps.

In summary, the core concept is that the contract curve comprises allocations where the indifference curves are tangent to one another, i.e., where MRS1 equals MRS2. For Cobb-Douglas preferences, this tangency characterization holds, so the statement describing the contract curve as the series of tangency points with a single common tangent is correct in principle. The absence of explicit options means we cannot assess any other candidate statements, but the standard, correct interpretation relies on the tangency condition between the two Cobb-Douglas indifference curves.

ECON_104B_001_25S Chapter 16 Practice Problems -- Multiple-Choice

If each of the two players represented in an Edgeworth box has Cobb-Douglas indifference curves, then the contract curve will be

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