(solution) In Figure 14.14, show that, depending upon the location and shape of her indifference curves, Ida

(solution) In Figure 14.14, show that, depending upon the location and shape of her indifference curves, Ida

In Figure 14.14, show that, depending upon the location and shape of her indifference curves, Ida could prefer any of the following three possibilities: (1) a tangency along line-segment EL 1 (she sells some of her endowed Y for X ); (2) a tangency along line- segment EK 1 (she sells some of her endowed X for Y ); or (3) a nontangency solution at point E (she sticks with her endowment position, i.e., she chooses autarky).