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Unformatted text preview: Draw something downward sloping and tangent to the budget constraint. The equation that you reach after setting the slope of the budget constraint equal to the indifference curve this equation is what you use to determine the point at which the budget constraint and indifference curves are tangent to each other. o The line F = 2E intersects the budget constraint at (50, 100), which is the tangent point. o Draw your indifference curve tangent at that point. Problem #1 Make sure that you designate either Football and Basketball as either X or Y and keep your axes consistent (for when you plot them on the graph). The exponents in cobbdouglas utility function (only!) tell you that your percentage of income spent on each good When your exponents do NOT add to up to 1 you need a monotonic transformation to a cobbdouglas utility function that DOES have exponents that DO add up to 1: Use this procedure to check your answer after finding the utility function:...
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 Spring '09
 Nonnenmacher
 Utility

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