Exactly! Customers are willing to pay $7.89 more for the water bottle if it would hold 30 oz rather than 24 oz. You calculated the utility gain for the increase in the water bottle’s capacity, then found the new price so that the utility loss between the original price and the new price exactly equals the utility gain from the larger bottle, and, finally, found the difference between the new and original price to determine the increase in willingness-to-pay. Nice job!
Imagine you are on a team that is designing reusable water bottles. You are currently thinking of a model that has a capacity of 24 oz, keeps beverages cold for 12 hours, and costs $32. Use the conjoint analysis output data below to find customers’ increased willingness to pay for a 6 oz increase in the capacity of the water bottle.
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