Whenever a constraint has positive slack, the shadow price is equal to one.

Question

Quizplus · Accepted Answer

When a constraint has positive slack, it means that the resource it represents is not fully utilized, and there is room for more production. In such cases, the shadow price reflects the opportunity cost of using one additional unit of that resource. The shadow price is generally not equal to one, as it depends on the specific context and supply-demand dynamics of the market.

Whenever a Constraint Has Positive Slack, the Shadow Price Is