A shadow price measures the:
A) impact of all nonbinding constraints on the objective function simultaneously.
B) market price of the resource in question.
C) total profit earned from the firm's given decisions.
D) change in the value of the objective function associated with a unit change in the resource.
E) loss incurred by not operating at the optimal point of the feasible region.

Question

Quizplus · Accepted Answer

A shadow price is defined as the change in the value of the objective function associated with a unit change in a particular constrained resource. It reflects how much the optimal value of the objective function would change if an additional unit of the resource were available. Therefore, option D is the correct answer.

A Shadow Price Measures The