When two people trade their initial endowments to a point on the ...

[Chelseaamend]

When two people trade their initial endowments to a point on the contract curve, only the level of the endowments will determine the new allocation.
 
  Indicate whether the statement is true or false

Question 2

Suppose the short-run production function is q = 10  L. If the wage rate is 10 per unit of labor, then AFC equals
 
  A) 0.
  B) 1.
  C) 10/q.
  D) It cannot be determined from the information provided.

[lorealeza]

Answer to Question 1

False. The respective bargaining abilities will also play a role in determining the final allocation.

Answer to Question 2

D