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.

Question

Quizplus · Accepted Answer

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.

In the Tourist-Trap Model,a Consumer Might Pay More Than Marginal