Murabaḥah is a term for a sales contract where the buyer and seller agree on the markup, the ratio between the cost of a good or service and what?
Murabaha Murabaḥah, murabaḥa or murâbaḥah (Arabic: مرابحة‎ ‎ , derived from "ribh" Arabic: ربح‎ ‎ , meaning profit) is a term of "fiqh" (Islamic jurisprudence) for a sales contract where the buyer and seller agree on the markup (profit) or "cost-plus" price for the item(s) being sold. In recent decades it has become a term for a very common form of Islamic (i.e. "shariah compliant") financing, where the price is marked-up in exchange for allowing the buyer to defer payment (a contract with deferred payment being known as "bai-muajjal"). "Murabaha" financing is similar to a rent-to-own arrangement in the non-Muslim world, with the intermediary (i.e. the lending bank) retaining ownership of the item being sold until the loan is paid in full. There are also Islamic investment funds and sukuk (Islamic bonds) that use "murabahah" contracts.
Contract curve In microeconomics, the contract curve is the set of points representing final allocations of two goods between two people that could occur as a result of mutually beneficial trading between those people given their initial allocations of the goods. All the points on this locus are Pareto efficient allocations, meaning that from any one of these points there is no reallocation that could make one of the people more satisfied with his or her allocation without making the other person less satisfied. The contract curve is the subset of the Pareto efficient points that could be reached by trading from the people's initial holdings of the two goods. It is drawn in the Edgeworth box diagram shown here, in which each person's allocation is measured vertically for one good and horizontally for the other good from that person's origin (point of zero allocation of both goods); one person's origin is the lower left corner of the Edgeworth box, and the other person's origin is the upper right corner of the box. The people's initial endowments (starting allocations of the two goods) are represented by a point in the diagram; the two people will trade goods with each other until no further mutually beneficial trades are possible. (Contrary to this claim neither the point of initial endowments, nor the contract curve is displayed in the actual diagram shown here.) The set of points that it is conceptually possible for them to stop at are the points on the contract curve.