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...
The smaller the fraction of an investment financed by borrowing
A) the greater the potential return and the smaller the potential loss on that investment. B) the greater the potential return and potential loss on that investment. C) the smaller the potential return and potential loss on that investment. D) the smaller the potential return and the greater the potential loss on that investment.
Engaging in international trade has all of the following effects except:
A. altering prices in different countries. B. influencing labor markets in different countries. C. increasing number of goods and services we can consumer in different countries. D. it makes use of resources less efficient.
The kinked demand curve is an explanation of sticky prices
a. True b. False Indicate whether the statement is true or false
Other things the same, if the government increases transfer payments to households, then the effect of this on the government's budget
a. will make investment rise. b. will make the rate of interest rise. c. will make public saving rise. d. All of the above are correct.