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

B

Step-by-step 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

Answer 2

B. each customer's reservation price.

Step-by-step 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