When we solve the firm's dual production problem (i.e., maximize output subject to a cost constraint) by the method of Lagrange multipliers, the optimal value of the Lagrange multiplier equals the:
A) marginal product per unit cost of each variable input.
B) marginal product of capital.
C) marginal product of labor.
D) marginal cost of production.

Question

Quizplus · Accepted Answer

The Lagrange multiplier in the dual production problem represents the marginal product per unit cost of each variable input, indicating how much output would increase with an additional unit of cost.

When We Solve the Firm's Dual Production Problem (I