Page 429 - DECO401_MICROECONOMIC_THEORY_ENGLISH

Microeconomic Theory

Notes 30.4 Summary

· The optimal search depends on the expected profit by search of buyer. Expected profit is expected
loss in price. Generally, if buyer spends a big part of his income on a particular object, then his
expected profit is more than the search. He will spend more time in search.

30.5 Keywords
· Probability: Possibility
· Buyer: Person who buys
· Asymmetric: Asymmetric

30.6 Review Questions

1. What is the purpose of theory of search? Explain it.
2. Write a comment on “Salop Model”.
3. What do you mean by asymmetric information?
4. What is market signalling? Explain.

Answers: Self Assessment

1. Constant 2. Information 3. Time 4. (a)
5. (b) 6. (b) 7. True 8. True
9. False 10. True

30.7 Further Readings

1. Microeconomics—Frank Cowbell, Oxford University Press, 2007.
2. Microeconomics— Robert S. Predik, Daniel L. Rubenfield and Prem L. Mehta, Pearson
Education, 2009, PBK, 7th Edition.
3. Microeconomics— David Bosanko and Ronald Brutigame, Wiley India, 2011, PBK, 4th
Edition.

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