A Shadow Price Measures

question 24

Multiple Choice

A shadow price measures:

• A)the impact of all nonbinding constraints on the objective function simultaneously.
• B)the market price of the resource in question.
• C)the revenue earnings from the possible sale of goods.
• D)the change in the value of the objective function associated with a unit change in the resource..
• E)the amount of loss incurred by not operating at the optimal point of the feasible region.

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Definitions:

Direct Labor Costs

These refer to the expenses associated with paying workers who directly manufacture or produce the goods and services.

Work in Process Inventory

Represents goods that are partially completed in a manufacturing process but are not yet finished products.

Cash Account

An account that records the amount of cash transactions a company engages in over a period.

Direct Labor Costs

The compensation and perks provided to workers directly engaged in manufacturing products or delivering services.