There are a large number of shops and she knows that 2/3 of the shops charge 59 and 1/3 charge 56 but she can only find out the price by visiting the store.Each visit costs her 80p.Assume she wants to buy one unit of the good and follows a sequential search rule, assessing what action to take after each search.

(a)Supposing both types of firms have the same marginal cost, how might it be that there is equilibrium in this market? At what level of marginal cost for the product will profits be equivalent for both types of stores?