What are positive and negative shadow prices, and how are they interpreted?
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Positive shadow prices indicate that increasing the resource availability would improve the objective function, while negative shadow prices suggest that decreasing the resource availability would improve the objective function, with the magnitude representing the marginal value of the change.
Positive shadow prices indicate that increasing the right-hand side of a constraint will improve the objective function's value. This means the constraint is binding, and additional resources would enhance the outcome.
Negative shadow prices suggest that increasing the constraint's right-hand side would decrease the objective function's value. This implies that the constraint is also binding, but adding more resources could be detrimental, often reflecting diminishing returns.
In summary, positive prices indicate value in additional resources, while negative prices signal potential losses from increasing those resources.