The reservation price for consumer capital good depends on
A)the present value of the EV from the complementary good
B)the marginal utility derived from the capital good
C)the present value of the CV from the capital good
D)consumer preferences and the price of the complementary good

Question

Quizplus · Accepted Answer

The reservation price of a consumer capital good depends on consumer preferences and the price of the complementary good. The other options listed do play a role in determining the reservation price, but they are not the primary factors. The present value of the EV from the complementary good and the present value of the CV from the capital good may influence the reservation price, but ultimately it is up to consumer preferences and how much they are willing to pay based on the price of the complementary good. The marginal utility derived from the capital good may also play a role, but it is not the primary determinant of the reservation price.

The Reservation Price for Consumer Capital Good Depends on