The price where the marginal benefit of search equals the marginal cost is called the
A) search price.
B) discovered price.
C) marginal price.
D) reservation price.

Question

Quizplus · Accepted Answer

The price where the marginal benefit of search equals the marginal cost is called the reservation price. It is the highest price that a consumer is willing to pay for a particular product or service. At this price, the consumer is indifferent between buying and not buying the product, as the marginal benefit of buying is equal to the marginal cost of search. Thus, the consumer is willing to pay the reservation price if the product is offered at or below this price, but will not buy if the price is higher than the reservation price.

The Price Where the Marginal Benefit of Search Equals the Marginal