Hello sir,
I was just a little confused in the following question could you just help me out?
Cost/kg=4
Contribution/unit= $10
New contribution/unit= $17(as a result of additional 1 unit of material)
Shadow price=$7
What is the most the company should be willing to pay for the extra material?
should the answer be= 4+7=11 or 17+4=21
Thanks in advance:)
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Shadow price
6y ago#1The answer is $11 (the current cost per kg plus the shadow price).
I do explain this in my free lectures. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
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