Explain graphically how to determine the shadow price of a binding constraint in an LP with two variables. Show also the formulation of your LP.
Expert Answer
Shadow price for a binding constraint can be non-zero or zero. Its sign depends on minimization or maximization problem. The type of a constraint can be ?, ?, or =.
Shadow price of a constraint represents the rate of change of optimal value when there is a marginal change in the constraint. The shadow price may be positive, negative, or, zero.
A linear program in two variables,
maximize, 30a + 10b
subject to constraints,
5a + 2b
OR
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