By the method of Lagrange multipliers, the optimal value of the Lagrange multiplier equals the:

Question

Quizplus · Accepted Answer

The Lagrange multiplier method involves maximizing a utility function subject to a budget constraint. The Lagrange multiplier itself represents the marginal utility per dollar spent on the last unit of each good. Therefore, choice C is correct. Additionally, the optimal bundle of goods chosen must also have equal marginal utility per dollar spent on each good, which is equivalent to the marginal utility of income. Therefore, choices A and E are also correct. Choice B may be relevant in other contexts, but it is not directly related to the Lagrange multiplier method used to solve utility maximization problems.

By the Method of Lagrange Multipliers, the Optimal Value of the Lagrange