Suppose you solve a utility maximization problem, and the solution val

Suppose you solve a utility maximization problem, and the solution value of the Lagrange multiplier equals zero. What does this outcome imply about the problem solution?

A) You must have made an error while solving the problem.
B) The budget constraint is not binding, and the constrained solution is equal to the solution to the unconstrained utility maximization problem.
C) The optimal utility level for the consumer equals zero.
D) The consumer’s demand curve is upward sloping.

ANSWER

B