The Tangency Condition

The best affordable bundle

Tangency as an equation

Checking it with Cobb-Douglas

When tangency is not enough

At a bundle where the indifference curve crosses the budget line, why is that bundle not optimal?

What does the tangency condition MRS equal to p1 over p2 mean economically?

Suppose the MRS at the current bundle is 3 while the price ratio is 1, good one is cheap relative to how it is valued. What happens?

For u equal to x1 x2 with income 20 and prices 1 and 1, where is the optimum and why?

For u equal to x1 x2 with income 20 and equal prices, compute the utility at the optimal bundle, and write the number.

The indifference curve x1 x2 equal to 75 crosses the same budget at two bundles. Compute x1 at the crossing where x2 equals 15, and write the number.

The curve x1 x2 equals 75 crosses the budget at (5, 15), while the tangent curve reaches 100. What is the utility gain from climbing to the tangency?

Why is finding a tangency point not enough to declare an optimum?

For u of x1 x2 with income 20 and prices 2 and 1, where is the optimum?

How does the tangent curve x1 x2 equals 100 meet the budget x1 plus x2 equals 20, compared with the curve at 75?

For u of x1 x2 with income 20 and prices 2 and 1, compute the utility at the optimal bundle, and write the number.

At the crossing bundle (5, 15) on the curve x1 x2 equals 75, compute the absolute MRS, and write the number.