Question 1

In a Dutch auction:

Accepted Answer

A)  the dominant strategy is to bid up to your reservation price. 
B)  the dominant strategy is to bid beyond your reservation price. 
C)  there is no dominant strategy. 
D)  the dominant strategy is to bid up to half of your reservation price. 
E)  the dominant strategy is to maximize expected utility. 
A)  the dominant strategy is to bid up to your reservation price. 
B)  the dominant strategy is to bid beyond your reservation price. 
C)  there is no dominant strategy. 
D)  the dominant strategy is to bid up to half of your reservation price. 
E)  the dominant strategy is to maximize expected utility.

Question 2

The winner's curse is an issue only when:

Accepted Answer

A)  an auction is conducted by sealed bid. 
B)  an auction is an increasing value auction. 
C)  an auction is a decreasing bid auction. 
D)  the true value of the good or service being auctioned is unknown. 
E)  bidders are able to collude. 
A)  an auction is conducted by sealed bid. 
B)  an auction is an increasing value auction. 
C)  an auction is a decreasing bid auction. 
D)  the true value of the good or service being auctioned is unknown. 
E)  bidders are able to collude.

Question 3

What is the optimal bid for a descending-price auction if the bidder's reservation price is 8,the lowest possible bid is 2,and there are three bidders?

Accepted Answer

A)  2. 
B)  6. 
C)  7. 
D)  8. 
E)  None of the above. 
A)  2. 
B)  6. 
C)  7. 
D)  8. 
E)  None of the above.

Question 4

Which of the following is an example of an ascending-bid auction?

Accepted Answer

A)  Sealed-bid auction. 
B)  Japanese auction. 
C)  Dutch auction. 
D)  Vickrey auction. 
E)  Rabbit auction. 
A)  Sealed-bid auction. 
B)  Japanese auction. 
C)  Dutch auction. 
D)  Vickrey auction. 
E)  Rabbit auction.

Question 5

The optimal reservation price for a seller is:

Accepted Answer

A)  the value of the object being auctioned off if it does not sell. 
B)  managerial estimates of the highest reservation price among buyers. 
C)  managerial estimates of the lowest reservation price among buyers. 
D)  the average of a and b. 
E)  equal to marginal cost. 
A)  the value of the object being auctioned off if it does not sell. 
B)  managerial estimates of the highest reservation price among buyers. 
C)  managerial estimates of the lowest reservation price among buyers. 
D)  the average of a and b. 
E)  equal to marginal cost.

Question 6

Betty has bid $2,000 on a painting that she is buying for investment purposes.If she has a 40% chance of winning the auction and the price paid by the auction winner is $1,500,the expected profit of the auction is:

Accepted Answer

A)  $0. 
B)  $200. 
C)  $500. 
D)  $800. 
E)  $2,000. 
A)  $0. 
B)  $200. 
C)  $500. 
D)  $800. 
E)  $2,000.

Question 7

A reverse auction is one in which the:

Accepted Answer

A)  price starts high and then is reduced until only one bidder remains. 
B)  price starts low and then the seller raises price until only one bidder remains. 
C)  price starts high and then is reduced until only one seller remains. 
D)  price starts low and then the buyer raises the price until only one seller remains. 
E)  bidders submit sealed bids for the right to participate in the auction. 
A)  price starts high and then is reduced until only one bidder remains. 
B)  price starts low and then the seller raises price until only one bidder remains. 
C)  price starts high and then is reduced until only one seller remains. 
D)  price starts low and then the buyer raises the price until only one seller remains. 
E)  bidders submit sealed bids for the right to participate in the auction.

Question 8

In a Dutch auction:

Accepted Answer

A)  buyers bid against each other with a succession of increasingly higher prices until only one remains. 
B)  a bid is announced, and if no buyer accepts the bid in a given period of time, a new, slightly lower, bid is announced; this procedure continues until a bidder accepts the announced price. 
C)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bid is accepted. 
D)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bidder wins, but the transaction occurs at the second highest (lowest) price. 
E)  none of the above. 
A)  buyers bid against each other with a succession of increasingly higher prices until only one remains. 
B)  a bid is announced, and if no buyer accepts the bid in a given period of time, a new, slightly lower, bid is announced; this procedure continues until a bidder accepts the announced price. 
C)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bid is accepted. 
D)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bidder wins, but the transaction occurs at the second highest (lowest) price. 
E)  none of the above.

Question 9

Repurchase tender offers require sellers to:

Accepted Answer

A)  submit a sealed bid indicating the minimum amount that they would accept for their shares. 
B)  submit a schedule indicating their willingness to supply different numbers of shares at different prices. 
C)  accept or reject the tender offer price specified by the corporation. 
D)  contractually limit their opportunity to sell shares on the open market. 
E)  purchase warrants that specify the future price of shares. 
A)  submit a sealed bid indicating the minimum amount that they would accept for their shares. 
B)  submit a schedule indicating their willingness to supply different numbers of shares at different prices. 
C)  accept or reject the tender offer price specified by the corporation. 
D)  contractually limit their opportunity to sell shares on the open market. 
E)  purchase warrants that specify the future price of shares.

Question 10

In a second-price,sealed-bid auction:

Accepted Answer

A)  buyers bid against each other with a succession of increasingly higher prices until only one remains. 
B)  a bid is announced, and if no buyer accepts the bid in a given period of time, a new, slightly lower, bid is announced; this procedure continues until a bidder accepts the announced price. 
C)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bid is accepted. 
D)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bidder wins, but the transaction occurs at the second highest (lowest) price. 
E)  none of the above. 
A)  buyers bid against each other with a succession of increasingly higher prices until only one remains. 
B)  a bid is announced, and if no buyer accepts the bid in a given period of time, a new, slightly lower, bid is announced; this procedure continues until a bidder accepts the announced price. 
C)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bid is accepted. 
D)  each bidder submits a price that is known only to that bidder; bids are opened and the highest (lowest) bidder wins, but the transaction occurs at the second highest (lowest) price. 
E)  none of the above.

In a Dutch auction:

The winner's curse is an issue only when:

What is the optimal bid for a descending-price auction if the bidder's reservation price is 8,the lowest possible bid is 2,and there are three bidders?

Which of the following is an example of an ascending-bid auction?

The optimal reservation price for a seller is:

Betty has bid $2,000 on a painting that she is buying for investment purposes.If she has a 40% chance of winning the auction and the price paid by the auction winner is $1,500,the expected profit of the auction is:

A reverse auction is one in which the:

In a Dutch auction:

Repurchase tender offers require sellers to:

In a second-price,sealed-bid auction:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters

Exam 13: Auctions

In a Dutch auction:

The winner's curse is an issue only when:

What is the optimal bid for a descending-price auction if the bidder's reservation price is 8,the lowest possible bid is 2,and there are three bidders?

Which of the following is an example of an ascending-bid auction?

The optimal reservation price for a seller is:

Betty has bid $2,000 on a painting that she is buying for investment purposes.If she has a 40% chance of winning the auction and the price paid by the auction winner is $1,500,the expected profit of the auction is:

A reverse auction is one in which the:

In a Dutch auction:

Repurchase tender offers require sellers to:

In a second-price,sealed-bid auction:

Introduction

Demand Theory

Consumer Behavior and Rational Choice

Estimating Demand Functions

Production Theory

The Analysis of Costs

Perfect Competition

Monopoly and Monopolistic Competition

Managerial Use of Price Discrimination

Bundling and Intrafirm Pricing

Oligopoly

Game Theory

Risk Analysis

Principalagent Issues and Managerial Compensation

Adverse Selection

Government and Business

Optimization Techniques

Appendix Problems

Filters