Consider a Consumer Who Is Searching for the Lowest Price

question 62

Multiple Choice

Consider a consumer who is searching for the lowest price for good X.The consumer knows that 75 percent of the time she will find a store charging $10 and 25 percent of the times she will find a store charging $7.The consumer will search again if her marginal cost of searching is constant and is

• A)strictly higher than $3.
• B)lower than or equal to $0.75.
• C)between $1.00 and $2.25.
• D)is exactly $0.

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Definitions:

Electricity

A form of energy resulting from the existence of charged particles, used for power and a variety of applications in the modern world.

Medical Services

Healthcare and treatment provided by trained medical professionals to diagnose, treat, and prevent illness or injury.

Brand Loyalty

The tendency of consumers to continuously purchase products from the same brand due to satisfaction, preference, or perceived superiority.

Elastic

A description of a situation where the demand or supply for a good or service significantly changes in response to a change in price.