Answer to Question #171577 in Microeconomics for Suprava Chettri

Question

Explain the different type search adopted by a consumer in market with incomplete information?

Indentify the condition for an individual member of a household to work entirely in household production?

Answer 1

Solution:

Perfect information is vital for making consumer decisions and it is usually a precondition for shopping. Consumers tend to perform a background check on the market in order to gather all the relevant information regarding the market for proper decision making. They can also evaluate the products on social media sites to compare prices, check reviews, check for discounts or coupons and get suitable advice on how to make wise purchasing decisions. The consumers can also search the specific market website to gather more information about the products and services being provided and whether they are of high quality, including reading any comments made with regards to the market.

Household production refers to the production of goods and services by the household members for their own consumption, using their own capital and unpaid labor.

The condition for an individual household member to work entirely in a household production depends on an effort to maximize utility, by efficiently allocating time, income, and the collection of goods and services they use or produce. They should be able to understand the opportunity costs of their time allocation before they venture into household production.