Learn some economics, be entertained... (part III)

2008-03-06 · Original WordPress address

Probably less explicitly but more importantly, when prices keep changing on you it means you've gotta recalculate your optimal allocations of expenditure again. You gotta set up a new Lagrangian, take the damn first order conditions and figure out if making out the adjustments in your optimal consumption basket - given your income - are worth it. What? You don't think that way? You don't set up constrained Lagrangians every time there's a change in prices and compute your Kuhn-Tucker conditions?