A Shadow Price Indicates How Much the Optimal Value of the Objective

question 32

True/False

A shadow price indicates how much the optimal value of the objective function will increase per unit increase in the right-hand side of a constraint.

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Definitions:

Politicians

Individuals engaged in the art or science of government, often as elected officials who develop or vote on laws and policies.

Involuntary Transactions

Economic exchanges where at least one party participates without willing consent, often resulting from coercion or lack of viable alternatives.

Economic Efficiency

A situation where all resources are allocated in a way that maximizes the net benefit to society.

Positive Externalities

Benefits experienced by third parties or the society at large as a result of an economic activity, without them directly paying for it.