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

question 46

Multiple Choice

The Lagrangian method of optimization results in a new variable, $\lambda$ ,called the Lagrangian multiplier,which shows the addition 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:

Factory Overheads

Factory overheads consist of all the indirect costs involved in manufacturing, including but not limited to utilities, rent, and salaries not directly tied to production activities.

Variable Cost

Expenses that change in proportion to the level of production or sales volume.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual increments.

Assembly Line

A production process that breaks down a complex job into a series of smaller tasks, which are completed in a sequential manner.