2. In the cost model in Section 15.9.1, it is generally difficult to estimate the cost parameter C2 (cost of waiting). As a result, it may be helpful to compute the cost C2 implied by the aspiration levels. Using the aspiration level model to determine c*, we can then estimate the implied C2 by using the following inequality:

604 Chapter 15

(See Problem 5, Set 15.9b, for the derivation.) Apply the procedure to the problem in Example 15.9-2, assuming c* = 3 and C1 = $12.00.