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The Tutor will give the correct answer but here is how I understand it….
Think of the shadow price as the extra (premium) the company is prepared to pay in addition to normal price.
So in this case the normal price is for Z is $2 and the additional Premium (shadow price) is $2.70. Therefore together this comes to $4.70.
Viewing 3 posts - 1 through 3 (of 3 total)