**Learning objectives**

- Distinguish between constrained and unconstrained optimization
- Understand and use the method of Lagrange multipliers to find an optimum
- Work with Cobb-Douglass functions with linear constraint
- Interpret the lagrange multiplier lambda

**Resources**

- Textbook 15.3

**In class**

- Mathematica notebook – Cobb-Douglas example
- Exercises from the textbook
- Shadow prices and an interpretation of the Lagrangian function
- The envelope theorem and more details