In: Economics
In general the formula for cash-on-the-table for a unit of a good not traded is
Group of answer choices
Buyer's reservation price less seller's reservation price
Buyer's reservation price multiplied by the seller's reservation price Seller's reservation price less
Buyer's reservation price Seller's reservation price divided by the
Buyer's reservation price Buyer's reservation price plus seller's reservation price
Buyer's reservation price divided by Seller's reservation price
Buyer's reservation price less seller's reservation price
Since the good is yet to be traded, the profit of that good can not be calculated. So, we have to use reservation price of the buyer and the seller. Cash-on-the-table formula is the unrealized profit which is the difference between buyer's reservation price and seller's reservation price.