A Shadow Price Tells How Much a Decision Variable Can

question 6

True/False

A shadow price tells how much a decision variable can be increased or decreased without changing the value of the solution.

---

Definitions:

Income Effect

The alteration in income for a person or the economy and the resulting influence on the demand for a certain good or service.

Substitution Effect

The economic principle indicating how consumers react to a change in price by substituting a more expensive item with a cheaper alternative.

Price

The total money demanded to secure a good or service.

Delphiniums

A genus of flowering plants known for their tall spikes of colorful flowers, often used in gardens and floral arrangements.