Shadow Prices

What is one more kilogram worth?

An interactive lesson with 6 steps, about 5 minutes: you predict, drag and solve, with instant feedback on every answer. It runs in your browser and needs JavaScript.

What you’ll learn

• A shadow price is the extra optimal profit per extra unit of a resource.
• Here flour is worth $0.80 per extra kilogram.
• Resources left over at the optimum have a shadow price of zero.

Steps

1. Valuing a resource
2. More flour
3. Read the shadow price
4. Is it worth buying?
5. Buying at a discount
6. Unused resources