Exploring Search

2. The theory of search applies not just to the labor market, but many other markets as well. Answer the following by identifying the costs and benefits of search.

a. Suppose you are moving to another city and must sell your house. Will you take the first offer you receive? How will you decide when to stop rejecting offers and accept one?
b. When you searched for a college, how many colleges did you investigate? Why did you not investigate one more?
c. When a person buys a new car, he generally visits several car dealers to compare prices and products. A person searching for a new toothbrush rarely visits more than one "toothbrush dealer." Why do people spend a lot of time searching for a new car but so little for a new toothbrush?
d. Suppose a person has had his car wrecked. Would you expect him to search more, less, or the same as a person who wants to buy a new car because his present car is getting old?
e. People search for marriage partners in the "marriage market." (Marriage is a contract.) Will people spend more time searching when divorce laws allow quick and easy divorces, or when no divorce is allowed?

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