Which of the following correctly describes the winner's curse?
a. When firms are bidding on an asset of uncertain value, the winning bid is not the average bid, which may be the most reliable estimate of the asset's true value. Instead the winning bid is the lowest bid, and so is the most pessimistic estimate of the asset's value.
b. When firms are bidding on an asset of uncertain value, the winning bid is not the average bid, which may be the most reliable estimate of the asset's true value. Instead the winning bid is the highest bid, and so is the most optimistic estimate of the asset's value.
c. When firms are bidding on an asset of uncertain value, the winning bid is the average bid, and thus is the most reliable estimate of the asset's value. The winner is cursed because only the most pessimistic bidder has a chance to earn economic rents on the asset.
d. When firms are bidding on an asset of uncertain value, the winning bid is not the highest bid, which may be the most reliable estimate of the asset's true value. Instead the winning bid is the average bid, and so is the most optimistic estimate of the asset's value.
b
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Since 1925, the longest recession in the United States lasted:
A. 120 months. B. 43 months. C. 60 months. D. 21 months.
The production possibilities frontier illustrates
a. the combinations of goods that could be produced with resources and technology constant b. how technology influences opportunity costs c. the law of diminishing returns d. how price changes affect decision making of individuals e. the law of demand
A common feature(s) of the early years of transition
a. Recession b. Hyperinflation c. Creation of democracy d. Macroeconomic stability e. A and b
Y = C + I + G + NX is an identity because
a. each symbol identifies a macroeconomic variable. b. the right-hand and left-hand sides are equal when an equilibrium is reached. c. the equality holds due to the way the variables are defined. d. None of the above is correct.