Microeconomics: Principles, Applications, and Tools (8th Edition)

Published by Prentice Hall
ISBN 10: 0-13294-886-9
ISBN 13: 978-0-13294-886-9

Chapter 14 - Imperfect Information: Adverse Selection and Moral Hazard - Exercises - 14.5 The Economics of Consumer Search - Page 336: 5.4

Answer

increases decreases

Work Step by Step

When searching becomes more costly (in terms of time or lost income), consumers are less willing to keep searching for a better deal. Therefore, they accept higher prices sooner → higher reservation price. As a result, they spend less time searching overall.
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