Suppose that p(x, y)-represents the production of a

Last updated: 8/10/2022

Suppose that p(x, y)-represents the production of a two-product firm. The company produces x units of the first product at a cost of c₁ each and y units of the second product at a cost of c₂ each. The budget constraint, B, is a constant given by the following formula. Use the method of Lagrange multipliers to find the value of λ in terms of Px, Py, c₁, and c₂. The resulting equation holds for any production function p and is called the Law of Equimarginal Productivity. B=c₁x + c₂y A. λ = Px/c₁ = Py/c₂ B. λ = Px = c₁ = Py = c₂ C. λ = Py/c₁ = Px/c₂ D. λ = c₁/Px = c₂/Py