What is the difference between the optimizing strategies used in an English auction and a Dutch auction?
What will be an ideal response?
In an English auction, it is an optimal strategy to continue bidding as long as price is below the bidder's willingness to pay for the item being auctioned. In a Dutch auction, on the other hand, the starting bid is much higher than any bidder's willingness to pay. The auctioneer lowers the price until one bidder accepts it and pays an amount equal to his bid. In a Dutch auction, a bidder should bid below his willingness to pay for the item. This is because if a bidder accepts the price when it reaches his willingness to pay for the item, he will earn zero consumer surplus. However, if he does not accept the offer and lets the price fall further, he has a higher chance of losing because another bidder might accept it. This risk increases if there is a larger number of bidders. Therefore, in a Dutch auction, the optimal bid is determined by multiplying the bidder's willingness to pay by the number of other competitors and dividing it by the total number of bidders.
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Which of the following could cause an industry to be an increasing-cost industry?
a. The development of subindustries in response to industry growth. b. The factor-price effect. c. Identical break-even prices across firms. d. Substantial economies of scale in production.
Refer to above figure. If the economy were in the initial position (where OmL1 workers were in manufacturing, what trade policy might gain ABC of economic welfare?
What will be an ideal response?
What are instantaneously consumed as they are being produced?
a. gifts b. services c. intermediate goods d. durable goods e. basic goods
Who loses and who gains from the minimum wage?
A) Losers are all workers and gainers are all firms. B) Losers are all firms and gainers are all workers. C) Losers are all firms and some workers, while gainers are other workers. D) Gainers are some firms and all workers, while losers are some firms. E) Gainers are some firms and some workers, while losers are other firms and other workers.