Classify each of the following examples as search cost, bargaining cost, or enforcement cost to buy a 1965 Rover Mini
(i)The buyer asks the seller questions about the car’s ignition system
(ii)The seller is taking time to check the past post of the potential buyer at www.theminiforum.co.uk
(iii)Taking time to find a website such as www.theminiforum.co.uk
(iv)Taking time off from work for the buyer and seller to meet
(v)Haggling over the price
(vi)Collecting the monthly payments for the purchase of the car
(i) Solution: Search cost
Explanation: Search cost refers to the energy, time money expended by a buyer who is researching a product or service for purchase. Since potential buyer is asking questions about the ignition system of car thus will be termed search cost
(ii) Solution: Search cost
Explanation: Search cost refers to the energy, time money expended by seller who is searching a potential buyer. As seller is taking time to check the past post of the potential consumer thus will be termed search cost
(iii) Solution: Search cost
Explanation: Search cost refers to the energy, time money expended by purchaser (or seller) that is searching a product (or potential buyer).
(iv) Solution: Search cost
Explanation: Search cost refers to the energy, time money expended by seller who is searching a potential buyer. As seller is taking off time to meet the potential consumer thus will be termed search cost
(v) Solution: Bargaining cost
Explanation: Since there is price haggling among the buyer and seller thus will be included in bargaining cost
(vi) Solution: Enforcing cost
Explanation: As car has already been sold thus collection of monthly payments will be included in enforcing cost
Classify each of the following examples as search cost, bargaining cost, or enforcement cost to b...