What Is an Interior Solution

An interior solution is a choice made by an agent that can be characterized as an optimum located at a tangency of two curves on a graph. A classic example of an interio solution is the tangency between a consumers budget line (characterizing the maximum amounts of good X and good Y that the consumer can afford) and the highest possible indifference curve. The slope of that tangency is where: (marginal utility of X)/(price of X) (marginal utility of Y)/(price of Y) Contrast interior solution with corner solution. (Econterms) Terms related to Interior Solution: Corner solution About.Com Resources on Interior Solution:None Writing a Term Paper? Here are a few starting points for research on Interior Solution: Books on Interior Solution:None Journal Articles on Interior Solution:None Return to Main Page