For nonlinear models, the Lagrange multipliers are only approximate indicators of shadow prices.

Question

Quizplus · Accepted Answer

In nonlinear models, the relationship between variables and constraints is not linear, making the interpretation of Lagrange multipliers as exact shadow prices less straightforward. They provide approximate indicators of how the objective function value changes with marginal changes in the constraint values.

For Nonlinear Models, the Lagrange Multipliers Are Only Approximate Indicators