Talk:Shadow price

From Wikipedia, the free encyclopedia

	This article is within the scope of WikiProject Systems, which collaborates on articles about the idea of systems. If you would like to help, you can edit this article or visit the project page, where you can join the project and/or contribute to the discussion.
???	This article has not yet received a rating on the assessment scale. [FAQ]
???	This article has not yet received an importance rating within Systems.
Help with this template Please rate this article, and then leave comments here to explain the ratings and/or to identify the strengths and weaknesses of the article.

This article is confusing. I wanted to know what role the lagrange multiplier ('lambda') plays in the utility-maximizing rule for AP Econ, went to the lagrange wiki entry, then went down to the 'application in economics' subsection, and finally came to this page about shadow prices.

Someone please revise or append a more digestible explanation, please. --Karch 06:11, 25 October 2006 (UTC)

The level of explanation is appropriate for a full understanding of the shadow price. Remember that shadow price is just a story Economists give for the value the langrange multiplier takes on at the optimal solution. The role the lagrange mulitpier plays in the utility-maximizing rule has nothing to do with it's numerical value at the optimal solution, which is what this wiki-entry treats. Sounds like someone needs to develop the lagrange entry further.

How is the LaGrange multiplier determined?