ECONOMICS
COST BENEFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Market Price
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Shadow Price
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Consumer Surplus (Surplus Konsumen)
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Economic Surplus (Economic Surplus = Consumer Surplus + Producer Surplus)
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Detailed explanation-1: -An example of shadow pricing as applied to a proposed business plan to renovate a company’s office facilities might be the assignment of a dollar value to the expected benefits of doing the renovation.
Detailed explanation-2: -Shadow pricing refers to the practice of assigning a monetary value to something whose value can only be estimated because it is not something regularly bought and sold in a marketplace. Shadow pricing is often required when a financial analyst is doing a cost-benefit analysis to decide regarding a proposed investment.
Detailed explanation-3: -Shadow Price. A price for a commodity that measures its marginal value: the rate at which system costs could be decreased or increased by slightly increasing or decreasing, respectively, the amount of the commodity being made available.
Detailed explanation-4: -A shadow price is defined as the net impact on social welfare resulting from a unit increase in the supply of a good or service by the public sector. Thus, a project that shows a profit at these shadow prices will make a positive contribution to social welfare.