Joe's Search Costs Are $5 Per Search

Multiple Choice

Joe's search costs are $5 per search.He wants to buy a video player for his wife for Christmas,and the lowest price he's found so far is $300.Joe thinks 80 percent of the stores charge $300 for video players and 20 percent charge $200.Joe's optimal decision is to:

A) continue to search for a lower price since the expected benefit of an additional search is $20, which exceeds his per-unit search costs.
B) stop searching and purchase a video player for $200.
C) continue to search for a lower price since the expected benefit of an additional search is $80, which exceeds his per-unit search costs.
D) None of the preceding statements is correct.