Question : Consider the following situation. Molly one among the 61 bidders : 1377585

Consider the following situation. Molly is one among the 61 bidders who took part in a first-price sealed-bid auction for vintage furniture. Molly places a value of $850, the highest value, for a vintage dressing table that came up for auction. Joseph has the second-highest willingness-to-pay of $750.

69) Refer to the scenario above. Which of the following is an optimal bid for Molly?

A) $836

B) $750

C) $825.50

D) $700

70) Refer to the scenario above. If Molly wins the auction by using her optimal bidding strategy, she will earn a surplus of ________.

A) $0

B) $50

C) $14

D) $25

71) Refer to the scenario above. Which among the following is a possible outcome if the number of bidders decreases to 45?

A) There will be no change in the outcome of the auction.

B) The optimal bid for Molly will now be $831.11.

C) The optimal bid for Molly will now be $745.

D) The optimal bid for Molly will now be $845.

72) Refer to the scenario above. If the number of bidders increases to 65, Molly’s optimal bid for the product would be ________, and her consumer surplus would be ________.

A) $836.92; $13.08

B) $831.11; $18.89

C) $765.5; $25

D) $750; $28.5

73) The higher the bid in a first-price sealed-bid auction, the ________ the chances of winning and the ________ the surplus earned.

A) higher; higher

B) higher; lower

C) lower; higher

D) lower; lower

74) The consumer surplus enjoyed by the winner of a first-price sealed-bid auction is equal to the difference between ________.

A) his value for the item being auctioned and the value of the lowest bid

B) his bid and the second-highest bid

C) his maximum willingness to pay for the good and his bid

D) his bid and the market price of the item

75) The optimal bidding strategy in a first-price sealed-bid auction is identical to the optimal bidding strategy in a(n) ________ auction.

A) open-outcry English

B) open-outcry Dutch

C) second-price sealed-bid

D) dollar

76) Which of the following is a difference between a first-price sealed-bid auction and a Dutch auction?

A) The highest bidder wins in a first-price sealed-bid auction while the second-highest bidder wins in a Dutch auction.

B) The second-highest bidder wins in a first-price sealed-bid auction while the highest bidder wins in a Dutch auction.

C) Bids are placed privately in first-price sealed-bid auction while bids are placed publicly in a Dutch auction.

D) Bids are placed one after another in a first-price sealed-bid auction while bids are placed simultaneously in a Dutch auction.

77) Which of the following is a similarity between a first-price sealed-bid auction and a Dutch auction?

A) Bids are placed privately in both the auctions.

B) Bids are placed publicly in both the auctions.

C) Bidders place their bids simultaneously in both the auctions.

D) The winner pays an amount equal to his bid in both the auctions.

78) A cruiser bike is being auctioned in a first-price sealed-bid auction. You always wanted to own a cruiser bike, and therefore decide to participate in the auction. You value the bike at $4,000. On the day of the auction, you saw that there are 70 other bidders. Your optimal bid in this case is ________.

A) $3,500

B) $3,000

C) $4,000

D) $3,944

79) In a second-price sealed-bid auction, ________.

A) bidders submit their bids privately

B) bidders place their bids one after another

C) bidders know each other’s bid

D) bidders bid above their willingness to pay

80) Which of the following is true of a second-price sealed-bid auction?

A) Bidders directly compete with each other.

B) Bidders submit their bids simultaneously.

C) Bidders know each other’s bid.

D) Bidders always bid above their willingness to pay.