The Shadow Price of Nonbinding Constraints

question 60

Multiple Choice

The shadow price of nonbinding constraints

• A) will always be zero.
• B) always take positive values.
• C) can never be equal to zero.
• D) is no longer valid if the right-hand side of the constraint remains the same.

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Definitions:

Real GDP

Real GDP (Gross Domestic Product) represents the total value of all goods and services produced over a specific time period within a country, adjusted for inflation.

Price Index

is a measure that examines the weighted average of prices of a basket of consumer goods and services, used to track inflation or deflation.

GDP

Gross Domestic Product is the sum of the market value of all final goods and services made within a country's borders in a given timeframe.

Gross National Product

The total value of all goods and services produced by a country's residents and businesses, regardless of where the production takes place, over a defined period.