Answer to Question #253591 in Macroeconomics for robot

Question

Describe how institutions, biology, technology, and preferences combine to

determine the following:

a.Technically feasible set.

b.Contract curve.

c.Final outcome.

Answer 1

Technology, biology, economic institutions and people's preferences are all important determinants of economic outcomes. The interactions between economic actors can lead to mutual gains, but it may also lead to conflicts over how the distribution of gains is done.

Institutions are rules that govern what people do when they interact in a joint project and the distribution of products of their joint effort. Institutions influence the power and other bargaining advantages of actors. The criteria of efficiency and fairness in this case may help in the evaluation of economic institutions and the outcomes of economic interactions.