What is a shadow price?

Answer by  noguf (162)

The shadow price is the opportunity cost of a good (what you give up in order to get it, everything and not just money). Where you might see it in a second year university class is in the calculation of the Lagrangean. The coefficient of the two equations (lambda) are the shadow prices of the two goods.

Answer by  Zaka (2315)

It is the price the maximum price a business interest is willing to pay or sell for something. Outstripping either end would ensue in an advese option.