What is the shadow price?
A)the price that indicates the amount by which throughput will increase for one unit of unconstrained resource
B)the price paid on the black market for one unit of scarce resource
C)the price paid for a scarce resource from an external provider
D)the price that indicates the amount by which contribution margin will increase for one unit of scarce resource

Question

Quizplus · Accepted Answer

The shadow price in the context of linear programming or resource allocation problems refers to the value that indicates how much the objective function (often the contribution margin or profit) will increase if there is one more unit of a scarce resource available. It does not refer to black market prices or prices paid to external providers.

What Is the Shadow Price