Chapter 6: Doing the "Best" We Can

Static Graphics

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Graphical Optimization - Budget Constraint & Indifference Curves

Different Incomes, Different Choice Sets, Same Tastes

Choice Sets & Indifference Maps - Corner Solutions

Choice Sets & Indifference Maps - Ruling out Corner Solutions

Kinked Budget Constraints, Optimal Bundles and Indifference Curves - "Outward Kink"

Kinked Budget Constraint, Optimal Bundles and Indifference Curves - "Inward Kink"

Convexity and Non-convexity in Budget Constraints and Choice Sets - Best Bundles

Non-Convexities in Taste

Converting the Constrained Optimization Problem into an Unconstrained Optimization Problem

Optimization with Missing Constraint: Quasilinear Utility Function

u(x₁,x₂) = x₂ + a ln x₁ with a = 25

Ruling out Corner Solutions

Non-Convexities in Choice Sets

Non-Convex Budget Constraints, Optimal Bundles and Indifference Curves - without Kink

Estimation Non-Convex Tastes from Observed Choices