Given an Objective Function Value of 150 and a Shadow

question 25

Multiple Choice

Given an objective function value of 150 and a shadow price for resource 1 of 5, if 10 more units of resource 1 are added (assuming the allowable increase is greater than 10) , what is the impact on the objective function value?

• A) increase of 50
• B) increase of unknown amount
• C) decrease of 50
• D) increase of 10

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Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a product or service, a crucial concept for decision making in production and pricing strategies.

Economic Profit

The difference between total revenue and total cost, including both explicit and implicit costs, representing the additional benefit over the next best alternative.

Competitive Price-searcher Market

A market structure where firms have some control over the pricing of their products due to differentiation, but still face significant competition.

Market Demand

The overall volume of a good or service that consumers in a market are ready and able to buy across a range of prices.