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    Price Analysis: Joe wants to buy a DVD player

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    Joe's search costs are $7 per search. He wants to buy a DVD player for his wife for Christmas, and the lowest price he's found so far is $200. Joe thinks one-third of the stores charge $300 for a DVD player, one-third charge $200, and one-third charge $185. Should Joe continue to search or buy a DVD player at a price of $200?

    Please step me through this problem.

    © BrainMass Inc. brainmass.com June 3, 2020, 6:24 pm ad1c9bdddf
    https://brainmass.com/business/accounting/price-analysis-joe-wants-buy-dvd-player-58598

    Solution Preview

    The expected benefit's of one more search = 2/3($0) + 1/3($200 - $185) = $5,
    1/3 probability of ...

    Solution Summary

    The solution shows the math to arrive at a decision.

    $2.19

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