A shadow price reflects which of the following in a maximization problem?
A)marginal cost of adding additional resources
B)marginal gain in the objective that would be realized by adding one unit of a resource
C)net gain in the objective that would be realized by increasing an objective function coefficient
D)marginal gain in the objective that would be realized by subtracting one unit of a resource
E)expected value of perfect information

Question

Quizplus · Accepted Answer

The shadow price in the context of a maximization problem represents the marginal gain in the objective (e.g., profit, output) that would be realized by adding one more unit of a constrained resource. It essentially tells us how much the objective function's value would increase if the supply of a limited resource were increased by one unit, assuming all else remains constant.

A Shadow Price Reflects Which of the Following in a Maximization