Hannah is willing to pay at least $850 and at most $1,000 for a new dishwasher.She goes to the various electronic stores in her neighborhood to compare the prices and the product features that differentiate one brand from the other.Which of the following can be categorized as Hannah's search cost?
A)The maximum price that Hannah is willing to pay for the dishwasher
B)The difference between the maximum and the minimum price that Hannah is willing to pay for the dishwasher
C)The transportation cost incurred while going from one store to another to collect information on prices and product features.
D)The price that Hannah ultimately pays while purchasing the dishwasher

Question

Quizplus · Accepted Answer

Hannah's search cost includes the time and effort she spends on going from one store to another to collect information on prices and product features. This is her transportation cost. The maximum price she is willing to pay (option A) and the difference between the maximum and minimum prices (option B) are her reservation price and range of acceptable prices, respectively. The price she ultimately pays (option D) is her transaction cost.

Hannah Is Willing to Pay at Least $850 and at Most