The Lagrangian Method of Optimization Results in a New Variable $\lambda$

question 17

Multiple Choice

The Lagrangian method of optimization results in a new variable, $\lambda$ ,called the Lagrangian multiplier,which shows the additional to total utility from an additional unit of income.In other words, $\lambda$ expresses the:

• A)the budget constraint.
• B)the cost of acquiring an additional util of satisfaction.
• C)the marginal utility of income.
• D)the optimal level of utility.

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Definitions:

Preferred Stock

represents ownership in a corporation with a claim on assets and earnings before common stockholders, often paying fixed dividends.

Par Value

The nominal value of a bond or stock as declared by the issuer, which might not match its value on the market.

Annual Dividend

The annual dividend is the total amount of dividend payments a company distributes to its shareholders over a year.

Common Stock

A type of security representing ownership in a corporation, entitling the holder to vote at shareholders' meetings and receive dividends.