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Opentuiton Lecture 4 spare capacity and shadow prices

This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.

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May 3, 2018 at 8:49 pm #449993
khanumishq
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sir, I didnt understand why did you write demand for E =0, (below the definition of shadow prices)
The demand for E is 10 units and there is a slack of 5 units, so shouldn’t we produce extra 5 units?
May 4, 2018 at 8:39 am #450032
John Moffat
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In future, you must ask in the Ask the Tutor Forum if you want me to answer. This forum is for students to help each other.
We can’t produce an extra 5 units because of the limits on material and labour available. The optimum mix stays at Point B.
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