In the tourist-trap model, a consumer might pay more than marginal cost for a good sold in a competitive market if the cost of possibly finding the good cheaper is more than the markup over marginal cost
What will be an ideal response?
True. The consumer makes her decision at the margin. If the cost of finding a cheaper price is greater than the possible savings, then it does not pay to search any further.
You might also like to view...
Which of the following would be categorized as an implicit cost?
a. not being able to spend your $10,000 savings if you sink the money in your business b. the cost of purchasing supplies for your house-cleaning business c. the cost of purchasing auto insurance for your dry-cleaning delivery business A) a only B) a and c only C) b and c only D) all of the above
It is argued that import substitution is a misguided trade policy if the intent is to promote long-term economic growth. Explain the reasons underlying this argument
What will be an ideal response?