Homework SourseA consumers reservation price is the price at which a consum
A consumer\'s reservation price is the price at which a:
| consumer prefers to search rather than purchasing at the lowest observed price. | |
| consumer prefers to purchase at the lowest observed price rather than to engage in another search. | |
| consumer is indifferent between searching again and purchasing at the lowest observed price. | |
| producer is indifferent between selling the product and not selling the product. |
Solution
At consumer\'s reservation price a consumer remains indifferent between searching again and purchasing at the lowest observed price.
Reason:
The reservation price of a consumer (i.e., the maximum price the consumer is willing to pay for the good) is a good approximation of the money value of the benefit that a consumer receives from buying a good.
Hence, the correct option is option (c).
