1. The reservation price is the price at which the consumer is
about additional search, meaning that the
of search equals the.
2.If a consumer knows that TVs are available at BestBuy at a price as low as $200, it is sensible not to continue shopping until the consumer finds the lowest-price store
. (True/False)
3. Suppose the range of prices for a cooking book is $30 to $70 and your discovered price (lowest price so far) is $48. If you visit one more store and discover a lower price, the best guess for a lower price is
and the savings if you discover this lower price is
.
4. As the opportunity cost of search time increases, the reservation price
(increases, decreases) and the amount of search time
(increases, decreases).
5. A doubling of prices
(increases, decreases) the marginal benefit of search at a given
price, and the percentage gap between the reservation price and the lowest price
(increases, decreases)
6. A study of consumer search for liquid detergents estimated that a doubling of income decreased the amount of search by roughly
(1, 14, 50, 70) percent. (Related to Application 5 on page 657.)