A Shadow Price Reflects Which of the Following in a Maximization

question 26

Multiple Choice

A shadow price reflects which of the following in a maximization problem?

• A) The marginal cost of adding additional resources
• B) The marginal gain in the objective that would be realized by adding one unit of a resource
• C) The net gain in the objective that would be realized by adding one unit of a resource
• D) The marginal gain in the objective that would be realized by subtracting one unit of a resource
• E) None of the choices are correct.

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Definitions:

Gross Margin Percentage

A profitability ratio that shows the percentage of sales revenue remaining after deducting the cost of goods sold, indicating the financial health and performance of a company's core activities.

Sales Volume

The quantity of products or services sold by a company within a specific period, often used as an indicator of business activity.

Return On Total Assets

A financial metric that measures the efficiency of a company in generating profits from its total assets.

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a finance charge on the income statement.