Why Does the GRG Algorithm Not Provide Allowable Increase or Allowable

question 30

Multiple Choice

Why does the GRG algorithm not provide allowable increase or allowable decrease information with the Reduced Gradient and Lagrange multiplier information?

• A) Because all constraints have slack.
• B) Because the constraints may not be linear.
• C) Because the solution is not necessarily a global optimum.
• D) Because the solutions are not necessarily corner points.

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Definitions:

Marginal Cost Curve

A graphical representation showing the cost of producing one more unit of a good.

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, representing a profit above the opportunity cost.

Explicit and Implicit Costs

Explicit costs are direct payments made to others in the course of running a business, like wages or rents, while implicit costs represent the opportunity costs of using resources owned by the business.

Marginal Costs

The cost of producing one additional unit of a good or service, reflecting the change in total cost that comes from a one unit increase in output.