ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Search costs include the opportunity cost of the time and effort spent on searching plus any explicit costs of money or scarce resources expended in searching. Search cost is a type of transaction cost that is incurred even before the transaction takes place.

Detailed explanation-2: -When consumers purchase one good or service, they are giving up the chance to purchase another. The best single alternative not chosen is their opportunity cost. Since a consumer choice always involves alternatives, every consumer choice has an opportunity cost.

Detailed explanation-3: -“The real cost of any purchase isn’t the actual dollar cost. Rather, it’s the opportunity cost-the value of the investment you didn’t make, because you used your funds to buy something else.”

Detailed explanation-4: -Search costs and decision making Search costs represent an associated transaction cost which can have an impact on the overall price of a product – it can drive the price up or down. Search costs can also become what economists call a ‘switching barrier’, i.e. an obstacle to switching brands or suppliers.