Your store sells an item desired by a consumer. The consumer is using an optimal search strategy; the accompanying graph shows the consumer??s expected benefits and costs of searching for a lower price.

a. What is the consumer??s reservation price?b. If your price is $3 and the consumer visits your store, will she purchase the item or continue to search? Explain.c. Suppose the consumer??s cost of each search rises to $16. What is the highest price you can charge and still sell the item to the consumer if she visits your store?d. Suppose the consumer??s cost of each search falls to $2. If the consumer finds a store charging $3, will she purchase at that price or continue tosearch?

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Expected benefits 30 and 28 costs EB 26 24 22 20 18 16 14 12 10 Price 5 3 4 2.