Answer to Question #266083 in Macroeconomics for damON

Question

10. Describe how institutions, biology, technology, and preferences combine to determine the following:

a. Technically feasible set.

b. Contract curve.

c. Final outcome.

 

Answer 1

Solution:

Technology, biology, economic institutions, and people's preferences all play significant roles in determining economic outcomes.

Power is the ability to do and get what we want, despite the intentions of others.

Interactions between economic actors can result in mutual gains, but also in disagreements about how those gains should be distributed.

Institutions have an impact on actors' bargaining power and other advantages.

Economic institutions and the outcomes of economic interactions can be evaluated using efficiency and fairness criteria.

Through proper efficiency and fairness, institutions, biology, technology, and preferences will be able to combine effectively to establish a technically feasible set, contract curve, and a better final outcome.