If consumers have limited information about price and search costs exist,then
A) the result must be that all firms will charge the same price.
B) the monopoly price must result.
C) the full-information, competitive price is not an equilibrium.
D) the difference in prices between firms will be greater than the search cost.

Question

Quizplus · Accepted Answer

When consumers have limited information about price and search costs exist, the Full-information, competitive price may not be an equilibrium because consumers cannot gather sufficient information to make informed decisions, resulting in market failures. Therefore, the equilibrium price may not be achieved.

If Consumers Have Limited Information About Price and Search Costs