Question 1

In an open-bid auction:

Accepted Answer

A)  Bids must be announced publicly. 
B)  Anyone may submit a bid. 
C)  Bidders' private valuations are common knowledge. 
D)  Reservation prices are never used. 
A)  Bids must be announced publicly. 
B)  Anyone may submit a bid. 
C)  Bidders' private valuations are common knowledge. 
D)  Reservation prices are never used.

Question 2

$$\begin{array} { c c c } 
\hline \text { Bidder } & \text { Bid per share } & \text { Shares } \
\hline \text { A } & \$ 50 & 5,000 \
\text { B } & \$ 45 & 10,000 \
\text { C } & \$ 40 & 40,000 \
\text { D } & \$ 40 & 25,000 \
\text { E } & \$ 35 & 10,000 \
\text { F } & \$ 30 & 15,000 \
\text { G } & \$ 20 & 35,000 \
\hline
\end{array}$$ TABLE 15.3
-Suppose that Magnum Opus Corporation announces that it intends to go public by offering 100,000 shares using a multiple-item Dutch auction. Table 15.3 summarizes the offer price and number of shares of each bidder. If the objective of the auction is to maximize sales revenues, the seller's reservation price is:

Accepted Answer

A)  $50 
B)  $45 
C)  $35 
D)  $25 
E)  None of the above. 
A)  $50 
B)  $45 
C)  $35 
D)  $25 
E)  None of the above.

Question 3

Three individuals are bidding for a house. The individuals' private values are V1 = $298,000, V2 = $310,000 and V3 = $322,000. It is generally believed that the lowest and highest possible values of the house are $250,000 and $350,000, respectively. Individual 2's optimal strategy is to submit a bid of:

Accepted Answer

A)  $250,000. 
B)  $288,000. 
C)  $290,000. 
D)  $298,000. 
E)  $300,000 
A)  $250,000. 
B)  $288,000. 
C)  $290,000. 
D)  $298,000. 
E)  $300,000

Question 4

$$\begin{array} { c c c } 
\text { Bidder } & \text { Bid per share } & \text { Shares } \
\hline \text { A } & \$ 70 & 200,000 \
\text { B } & \$ 50 & 50,000 \
\text { C } & \$ 45 & 50,000 \
\text { D } & \$ 40 & 100,000 \
\text { E } & \$ 35 & 50,000 \
\text { F } & \$ 30 & 100,000 \
\text { G } & \$ 20 & 100,000 \
\hline
\end{array}$$ TABLE 15.2
-Consider the information provided in Table 15.2, which represents bids in a multiple-item Dutch auction in which the seller wishes to dispose 500,000 shares. The lowest bid per share that will dispose of the entire offering is:

Accepted Answer

A)  $30 
B)  $40 
C)  $45 
D)  $50 
E)  $70 
A)  $30 
B)  $40 
C)  $45 
D)  $50 
E)  $70

Question 5

In a sealed-bid, first-price auctions with independent private values:

Accepted Answer

A)  Risk averse bidders should submit bids that are strictly below what each believes the object is worth. 
B)  Risk averse bidders should submit bids that are exactly equal to what they believe the object is worth when the number of bidders is small. 
C)  The bid of each risk-averse bidder will converge to his or her true value as the number of bidders increases. 
D)  Answers a and c are correct. 
E)  None of the above. 
A)  Risk averse bidders should submit bids that are strictly below what each believes the object is worth. 
B)  Risk averse bidders should submit bids that are exactly equal to what they believe the object is worth when the number of bidders is small. 
C)  The bid of each risk-averse bidder will converge to his or her true value as the number of bidders increases. 
D)  Answers a and c are correct. 
E)  None of the above.

Question 6

Three individuals are bidding for a house. The individuals' private values are V1 = $298,000, V2 = $310,000 and V3 = $322,000. It is generally believed that the lowest and highest possible values of the house are $250,000 and $350,000, respectively. Individual 1's optimal strategy is to submit a bid of:

Accepted Answer

A)  $250,000. 
B)  $288,000. 
C)  $290,000. 
D)  $298,000. 
E)  $300,000 
A)  $250,000. 
B)  $288,000. 
C)  $290,000. 
D)  $298,000. 
E)  $300,000

Question 7

Moe, Larry, Curly, and Shemp are bidding Groucho Marx' rubber duck. Their individualprivate values of the rubber duck are VM = $50,000, VL = $60,000, VC = $70,000 and VS = $80,000. It is generally believed that the lowest and highest possible values of the house are $40,000 and $100,000, respectively. Larry's optimal strategy is to submit a bid of:

Accepted Answer

A)  $40,000. 
B)  $47,500. 
C)  $55,000. 
D)  $62,500. 
E)  $70,000 
A)  $40,000. 
B)  $47,500. 
C)  $55,000. 
D)  $62,500. 
E)  $70,000

Question 8

An auction involving multiple bids for blocks of identical items in which the seller accepts the lowest bid that will dispose of the entire amount placed at auction is called a:

Accepted Answer

A)  Block auction. 
B)  Seal-bid auction. 
C)  Modified English auction. 
D)  Multiple item Dutch auction. 
E)  Japanese auction. 
A)  Block auction. 
B)  Seal-bid auction. 
C)  Modified English auction. 
D)  Multiple item Dutch auction. 
E)  Japanese auction.

Question 9

$$\begin{array} { c c c } 
\hline \text { Bidder } & \text { Bid per share } & \text { Shares } \
\hline \text { A } & \$ 100 & 100,000 \
\text { B } & \$ 90 & 200,000 \
\text { C } & \$ 75 & 300,000 \
\text { D } & \$ 50 & 200,000 \
\text { E } & \$ 40 & 300,000 \
\text { F } & \$ 30 & 100,000 \
\text { G } & \$ 25 & 50,000 \
\hline
\end{array}$$ TABLE 15.1
-Consider the information provided in Table 15.1. Suppose that seller retains the right to stop the bidding at any price. The objective of the auction is to maximize sales revenues. At the selected bid price, the sellers revenues are:

Accepted Answer

A)  $75 million. 
B)  $71 million. 
C)  $45 million. 
D)  $40 million. 
E)  None of the above. 
A)  $75 million. 
B)  $71 million. 
C)  $45 million. 
D)  $40 million. 
E)  None of the above.

Question 10

In an English auction with perfect information, the winner of the auction is the bidder who values the object:

Accepted Answer

A)  Least and pays what the object is worth to the highest bidder less the bidding increment. 
B)  Most and pays what the object is worth plus the bidding increment. 
C)  Most and Pays what the object is worth to the next highest bidder plus the bidding increment.. 
D)  Least and Pays what the object is worth to the highest bidder less the bidding increment. 
E)  None of the above are correct. 
A)  Least and pays what the object is worth to the highest bidder less the bidding increment. 
B)  Most and pays what the object is worth plus the bidding increment. 
C)  Most and Pays what the object is worth to the next highest bidder plus the bidding increment.. 
D)  Least and Pays what the object is worth to the highest bidder less the bidding increment. 
E)  None of the above are correct.

Question 11

$$\begin{array} { c c c } 
\hline \text { Bidder } & \text { Bid per share } & \text { Shares } \
\hline \text { A } & \$ 100 & 100,000 \
\text { B } & \$ 90 & 200,000 \
\text { C } & \$ 75 & 300,000 \
\text { D } & \$ 50 & 200,000 \
\text { E } & \$ 40 & 300,000 \
\text { F } & \$ 30 & 100,000 \
\text { G } & \$ 25 & 50,000 \
\hline
\end{array}$$ TABLE 15.1
-Consider the information provided in Table 15.1. If the seller disposes of the entire offering, the auction will raise:

Accepted Answer

A)  $100 million. 
B)  $90 million. 
C)  $71 million. 
D)  $50 million. 
E)  $40 million. 
A)  $100 million. 
B)  $90 million. 
C)  $71 million. 
D)  $50 million. 
E)  $40 million.

Question 12

In a sealed-bid, second-price auction with perfect information, the winner of the auction is:

Accepted Answer

A)  The bidder who values the object least and pays what the object is worth to the next highest bidder. 
B)  The bidder who values the object most and pays the bid submitted. 
C)  The bidder who values the object most and pays what the object is worth to the next highest bidder plus the bidding increment. 
D)  The bidder who values the object least and pays what the object is worth to the highest bidder. 
E)  None of the above. 
A)  The bidder who values the object least and pays what the object is worth to the next highest bidder. 
B)  The bidder who values the object most and pays the bid submitted. 
C)  The bidder who values the object most and pays what the object is worth to the next highest bidder plus the bidding increment. 
D)  The bidder who values the object least and pays what the object is worth to the highest bidder. 
E)  None of the above.

Question 13

$$\begin{array} { c c c } 
\hline \text { Bidder } & \text { Bid per share } & \text { Shares } \
\hline \text { A } & \$ 50 & 5,000 \
\text { B } & \$ 45 & 10,000 \
\text { C } & \$ 40 & 40,000 \
\text { D } & \$ 40 & 25,000 \
\text { E } & \$ 35 & 10,000 \
\text { F } & \$ 30 & 15,000 \
\text { G } & \$ 20 & 35,000 \
\hline
\end{array}$$ TABLE 15.3
-Suppose that Magnum Opus Corporation announces that it intends to go public by offering 100,000 shares using a multiple-item Dutch auction. Table 15.3 summarizes the offer price and number of shares of each bidder. If the objective of the auction is to maximize sales revenues, total revenues at the seller's reservation price is:

Accepted Answer

A)  $2,550,000. 
B)  $2,600,000. 
C)  $2,750,000. 
D)  $2,800,000. 
E)  None of the above. 
A)  $2,550,000. 
B)  $2,600,000. 
C)  $2,750,000. 
D)  $2,800,000. 
E)  None of the above.

Question 14

A closed-bid auction is:

Accepted Answer

A)  The same thing as a sealed-bid auction. 
B)  The same thing as a first-price auction. 
C)  One in which participation is by invitation only. 
D)  Only used in procurement auctions. 
E)  None of the above. 
A)  The same thing as a sealed-bid auction. 
B)  The same thing as a first-price auction. 
C)  One in which participation is by invitation only. 
D)  Only used in procurement auctions. 
E)  None of the above.

Question 15

In a Dutch auction with imperfect information, the winner of the auction is the bidder who values the object:

Accepted Answer

A)  Least and pays what the object is worth to the highest bidder less the bidding increment. 
B)  Most and pays the highest announced price that is below that value. 
C)  Most and pays what the object is worth to the next highest bidder plus the bidding increment. 
D)  Least and Pays what the object is worth to the highest bidder less the bidding increment. 
E)  None of the above are correct. 
A)  Least and pays what the object is worth to the highest bidder less the bidding increment. 
B)  Most and pays the highest announced price that is below that value. 
C)  Most and pays what the object is worth to the next highest bidder plus the bidding increment. 
D)  Least and Pays what the object is worth to the highest bidder less the bidding increment. 
E)  None of the above are correct.

Question 16

In a Dutch auction with perfect information, the winner of the auction is the bidder who values the object:

Accepted Answer

A)  Least and pays what the object is worth to the highest bidder less the bidding increment. 
B)  Most and pays what the object is worth plus the bidding increment. 
C)  Most and pays what the object is worth to the next highest bidder plus the bidding increment. 
D)  Least and Pays what the object is worth to the highest bidder less the bidding increment. 
E)  None of the above are correct. 
A)  Least and pays what the object is worth to the highest bidder less the bidding increment. 
B)  Most and pays what the object is worth plus the bidding increment. 
C)  Most and pays what the object is worth to the next highest bidder plus the bidding increment. 
D)  Least and Pays what the object is worth to the highest bidder less the bidding increment. 
E)  None of the above are correct.

Question 17

In a sealed-bid, first-price auction in which the bidding increment is $0.01:

Accepted Answer

A)  Only the winner submits a bid equal to what he or she values the object. 
B)  Only the loser submits a bid equal to what he or she values the object. 
C)  Both submit a bid that is equal to what he or she values the object. 
D)  Neither submit a bid that is equal to what he or she values the object. 
E)  None of the above are correct. 
A)  Only the winner submits a bid equal to what he or she values the object. 
B)  Only the loser submits a bid equal to what he or she values the object. 
C)  Both submit a bid that is equal to what he or she values the object. 
D)  Neither submit a bid that is equal to what he or she values the object. 
E)  None of the above are correct.

Question 18

Moe, Larry, Curly, and Shemp are bidding Groucho Marx' rubber duck. Their individualprivate values of the rubber duck are VM = $50,000, VL = $60,000, VC = $70,000 and VS = $80,000. It is generally believed that the lowest and highest possible values of the house are $40,000 and $100,000, respectively. Shemp's optimal strategy is to submit a bid of:

Accepted Answer

A)  $40,000. 
B)  $47,500. 
C)  $55,000. 
D)  $62,500. 
E)  $70,000 
A)  $40,000. 
B)  $47,500. 
C)  $55,000. 
D)  $62,500. 
E)  $70,000

Question 19

Moe, Larry, Curly, and Shemp are bidding Groucho Marx' rubber duck. Their individualprivate values of the rubber duck are VM = $50,000, VL = $60,000, VC = $70,000 and VS = $80,000. It is generally believed that the lowest and highest possible values of the house are $40,000 and $100,000, respectively. Curly's optimal strategy is to submit a bid of:

Accepted Answer

A)  $40,000. 
B)  $47,500. 
C)  $55,000. 
D)  $62,500. 
E)  $70,000 
A)  $40,000. 
B)  $47,500. 
C)  $55,000. 
D)  $62,500. 
E)  $70,000

Question 20

$$\begin{array} { c c c } 
\text { Bidder } & \text { Bid per share } & \text { Shares } \
\hline \text { A } & \$ 70 & 200,000 \
\text { B } & \$ 50 & 50,000 \
\text { C } & \$ 45 & 50,000 \
\text { D } & \$ 40 & 100,000 \
\text { E } & \$ 35 & 50,000 \
\text { F } & \$ 30 & 100,000 \
\text { G } & \$ 20 & 100,000 \
\hline
\end{array}$$ TABLE 15.2
-Consider the information provided in Table 15.2. If the seller disposes of the entire offering, the auction will raise:

Accepted Answer

A)  $12.5 million. 
B)  $13.5 million. 
C)  $14 million. 
D)  $15 million. 
E)  $15.75 million. 
A)  $12.5 million. 
B)  $13.5 million. 
C)  $14 million. 
D)  $15 million. 
E)  $15.75 million.

In an open-bid auction:

In a sealed-bid, first-price auctions with independent private values:

An auction involving multiple bids for blocks of identical items in which the seller accepts the lowest bid that will dispose of the entire amount placed at auction is called a:

In an English auction with perfect information, the winner of the auction is the bidder who values the object:

Bidder Bid per share Shares A \ 100 100,000 B \ 90 200,000 C \ 75 300,000 D \ 50 200,000 E \ 40 300,000 F \ 30 100,000 G \ 25 50,000 TABLE 15.1 -Consider the information provided in Table 15.1. If the seller disposes of the entire offering, the auction will raise:

In a sealed-bid, second-price auction with perfect information, the winner of the auction is:

A closed-bid auction is:

In a Dutch auction with imperfect information, the winner of the auction is the bidder who values the object:

In a Dutch auction with perfect information, the winner of the auction is the bidder who values the object:

In a sealed-bid, first-price auction in which the bidding increment is $0.01:

Bidder Bid per share Shares A \ 70 200,000 B \ 50 50,000 C \ 45 50,000 D \ 40 100,000 E \ 35 50,000 F \ 30 100,000 G \ 20 100,000 TABLE 15.2 -Consider the information provided in Table 15.2. If the seller disposes of the entire offering, the auction will raise:

Introduction to Game Theory

Noncooperative, One-Time, Static Games

Focal-Point and Evolutionary Equilibria

Infinitely-Repeated, Static Games

Finitely-Repeated, Static Games

Mixing Pure Strategies

Static Games With Continuous Strategies

Imperfect Competition

Perfect Competition and Monopoly

Strategic Trade Policy

Dynamic Games With Complete

Bargaining

Pure Strategies With Uncertain Payoffs

Torts and Contracts

Dynamic Games With Incomplete Information

Filters

Exam 15: Auctions

In an open-bid auction:

In a sealed-bid, first-price auctions with independent private values:

An auction involving multiple bids for blocks of identical items in which the seller accepts the lowest bid that will dispose of the entire amount placed at auction is called a:

In an English auction with perfect information, the winner of the auction is the bidder who values the object:

Bidder Bid per share Shares A \ 100 100,000 B \ 90 200,000 C \ 75 300,000 D \ 50 200,000 E \ 40 300,000 F \ 30 100,000 G \ 25 50,000 TABLE 15.1 -Consider the information provided in Table 15.1. If the seller disposes of the entire offering, the auction will raise:

In a sealed-bid, second-price auction with perfect information, the winner of the auction is:

A closed-bid auction is:

In a Dutch auction with imperfect information, the winner of the auction is the bidder who values the object:

In a Dutch auction with perfect information, the winner of the auction is the bidder who values the object:

In a sealed-bid, first-price auction in which the bidding increment is $0.01:

Bidder Bid per share Shares A \ 70 200,000 B \ 50 50,000 C \ 45 50,000 D \ 40 100,000 E \ 35 50,000 F \ 30 100,000 G \ 20 100,000 TABLE 15.2 -Consider the information provided in Table 15.2. If the seller disposes of the entire offering, the auction will raise:

Introduction to Game Theory

Noncooperative, One-Time, Static Games

Focal-Point and Evolutionary Equilibria

Infinitely-Repeated, Static Games

Finitely-Repeated, Static Games

Mixing Pure Strategies

Static Games With Continuous Strategies

Imperfect Competition

Perfect Competition and Monopoly

Strategic Trade Policy

Dynamic Games With Complete

Bargaining

Pure Strategies With Uncertain Payoffs

Torts and Contracts

Dynamic Games With Incomplete Information

Filters