The Shadow Price of Nonbinding Constraints

question 20

Multiple Choice

The shadow price of nonbinding constraints

• A)will always be zero.
• B)will always be a positive value.
• C)can never be equal to zero.
• D)is no longer valid if the right-hand side of the constraint remains the same.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collected.

Receivable

An amount due to be received by a company for goods or services provided on credit; an asset on the balance sheet.

Selling Merchandise

The act of offering goods for sale to consumers in exchange for money.

Services on Account

A method where businesses provide services to a customer and allow them to pay at a later time, recording the transaction as account receivable.