Question

Omega, Inc. sells its fitness wrist band for $100. It cost the company $62 to make the product. While Tom values the Omega wrist band at $122, his friend Dan values it at $105. The value placed by Tom and Dan are what economists would call:___________
A. producer's surplus.
B. each customer's reservation price.
C. each customer's value price.
D. the efficiency frontier.
E. competitive advantage.

Answer 1

Answer:

B. each customer's reservation price.

Explanation:

Reservation price is the highest amount a buyer would be willing to pay for a good or service.

I hope my answer helps you

Answer 2

Answer:

B

Explanation:

The value placed by Tom and Dan are called customer's reservation price.

For a seller , customer reservation price is defined as the minimum amount he is willing to sell an item while for a buyer , it is the maximum amount he is willing to pay in exchange for a good.

In other words , it is the least favorable negotiation that one would accept in the course of business transaction.

It is used to mitigate loss, determine and maintain profit for the purpose of business continuity