A shadow price (or dual value) reflects which of the following in a maximization problem?
A) the marginal gain in the objective realized by subtracting one unit of a resource
B) the market price that must be paid to obtain additional resources
C) the increase in profit that would accompany one added unit of a scarce resource
D) the reduction in cost that would accompany a one unit decrease in the resource
E) the cost level that must be achieved for profitability

Question

Quizplus · Accepted Answer

The shadow price in the context of a maximization problem represents the increase in the objective value (e.g., profit) that would result from having one additional unit of a scarce resource. It quantifies the value of relaxing a constraint by one unit.

A Shadow Price (Or Dual Value) Reflects Which of the Following