this is really confusing me so I just need a quick clarification:
The product originally cost £2, and then later we were offered extra units of the product for £3 a unit. As far as I'm aware, the shadow price is:
how much would be paid OVER THE ORIGINAL PRICE for one more unit of a scarce resource
The shadow price is calculated £5.75 - so we would be willing to pay £5.75 over the original price (£2) for one more unit - does this mean we would definitely take the extra units at £3 a unit, because we would in fact be willing to pay a max of £7.75 for those extra units, so £3 a unit is a good offer?
thanks