Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction
What will be an ideal response?
Assume you have a valuation of the good equal to $50. The price the winning bidder pays is equal to the second highest bid. If you bid $70 and win you will pay less than $50 if the second-highest bid (SHB) is less or equal to $50. In this case you are as well off as bidding $50. If you end up paying more you lose because you are paying more than your valuation of the good. So you are either as well off or worse off than bidding your highest valuation.
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In computing GDP, it is essential to
A) avoid double counting. B) include government transfer payments. C) include government tax revenues. D) count all intermediate products directly as they are produced.
The __________ is always larger than the __________
A) yield on a discount basis; coupon equivalent yield B) yield on a discount basis; bond equivalent yield C) coupon equivalent yield; yield on a discount basis D) None of the above.
All of the following are true regarding a production quota EXCEPT:
A. a production quota imposes limits on the quantity that individual firms can produce. B. a production quota is a way to raise prices without causing the overproduction that occurs under a price support program. C. a production quota places limitations on supply. D. a production quota does not lead to a deadweight loss.
What is it called when the value of a business is determined based on market-derived multiples?
a. income-based approach b. market-based approach c. excess earnings method d. asset accumulation approach e. none of these