Robert H. Frank,
Cornell University
Ian C. Parker,
University of Toronto
| Contract curve | A curve along which all final, voluntary contracts must lie.
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| Edgeworth exchange box | A diagram used to analyze the general equilibrium of an exchange economy.
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| Externality | Either a benefit or a cost of an action that accrues to someone other than the people directly involved in the action.
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| General equilibrium analysis | The study of how conditions in each market in a set of related markets affect equilibrium outcomes in other markets in that set.
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| Marginal rate of transformation (MRT) | The rate at which one output can be transformed into another at a point along the production possibilities frontier.
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| Pareto optimal | The term used to describe situations in which it is impossible to make one person better off without making at least one other worse off.
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| Pareto superior allocation | An allocation that at least one individual prefers and others like at least as well.
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| Production possibilities frontier | The set of output combinations such that (with a fixed endowment of factor inputs) the production of each good is maximized for any given level of efficient production of all other goods.
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2002 McGraw-Hill Higher Education