True or false? Only money prices affect incentives; shadow prices do not. Explai

Question

True or false? Only money prices affect incentives; shadow prices do not. Explain. True. Because shadow prices are not actually paid, they do not affect incentives. Only money prices affect incentives. True. Only money prices affect incentives. Shadow prices have no real opportunity cost. False. Both money prices and shadow prices affect incentives. The shadow price measures the opportunity cost. False. All money prices are shadow prices. Because money prices affect incentives, then shadow prices also affect incentives.

Explanation / Answer

Option( C ) - money price as well as shadow price will affect the incentives ,shadow prices are paid indirectly considering the opportunity cost caused by the consumer. These prices will determine the behavior of the business firms.

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