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Hi John!
In your example for shadow price, is $1.125 per kg or per unit or both?
I am still confused here.Per kg. Read again the definition of the shadow price. It is the most extra you would be prepared to pay for 1 extra unit of the limited resource. Since the relevant units for the limited resource is kg’s, then the shadow price is per kg.
Look at the calculation – you are calculating the extra contribution for having 1 extra kg !!
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