- Suppose consumers face numerous stores selling identical products, but charge differen prices.
- The consumer wants to purchase the product at the lowest possibke price, but also incurs a cost, c , to acquire price information.
- There is free recall and with replacement. Free recall means a consumer can return to any previously visited store.
- The consumer's reservation price, that at which the consumer is indifferent between purchasing and continue to search. is R
- When should a consumer cease searching for price information ?