Firms that sell both consumer capital goods and the complementary good
A)capture all the consumer surplus of the consumer capital good
B)sell the capital good at marginal cost
C)maximize profit on both goods individually
D)capture all the consumer surplus of the complementary good

Question

Quizplus · Accepted Answer

Firms that sell both consumer capital goods and the complementary goods often price the capital good at a lower margin to increase sales and then make a significant portion of their profit on the complementary goods. This strategy allows them to capture a large portion of the consumer surplus associated with the complementary goods, as consumers who have already purchased the capital good are more likely to buy the complementary goods from the same firm.

Firms That Sell Both Consumer Capital Goods and the Complementary