1. Education
Send to a Friend via Email
You can opt-out at any time. Please refer to our privacy policy for contact information.

Shadow Price


Definition: In the context of a maximization problem with a constraint, the shadow price on the constrain is the amount that the objective function of the maximization would increase by if the constraint were relaxed by one unit.

The value of a Lagrangian multiplier is a shadow price.

This is a striking and useful fact, but takes some practice to understand.


Terms related to Shadow Price:

About.Com Resources on Shadow Price:

Writing a Term Paper? Here are a few starting points for research on Shadow Price:

Books on Shadow Price:

Journal Articles on Shadow Price:

Related Video
Brian Price, executive director of marketing
Set Up a Formal Dinner Place Setting

©2014 About.com. All rights reserved.