Shadow Price

Posted in Finance, Accounting and Economics Terms, Total Reads: 1263

Definition: Shadow Price

When used in business sense it is the maximum price that an organization is willing to pay for extra units when the resources are limited depending upon the benefits derived from them.

Sometimes these prices come into the picture when resources are scare or demand exceeds the supply.

Eg: Sometimes premium cars are sold at higher prices than the retail price when the waitlist for the product is too long.

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