Several Web Sites, Like Pricewatch

question 31

Multiple Choice

Several web sites, like Pricewatch.com, allow consumers to input the name of a product, and the site then returns a list of suppliers with their respective prices for the product. This:

• A)increases the benefit of search.
• B)increases the free-rider problem.
• C)reduces the benefit of search.
• D)reduces the cost of search.

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Definitions:

Marginal Costs

The supplementary cost arising from the manufacture of an extra unit of a good or service.

Variable Inputs

Inputs that can be adjusted in the short term to alter the level of output in the production process.

Marginal Cost Function

A mathematical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Optimal Output

The level of production that maximizes a firm’s profit or minimizes its cost under given conditions.