Refer to the table below. Recall that the bidders only know their own private value of the item and they do not know the other participants' private values. Further, the participants are bidding in a sealed-bid second-price auction and each participant will submit bids using their optimal strategy, except Bidder #5 who submits a bid of $10.25 million. If the rest of the participants submit bids
according to their optimal strategy, Bidder ________ wins the auction and pays ________.
The table above lists the independent private values of five participants in an auction. Each of the bidders only knows their own value and does not know the private values of the other participants.
A) $3; $10.25 million
B) #5; $10 million
C) $3; $10 million
D) #5; $10.25 million
B) #5; $10 million
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Adam Smith's Wealth of Nations, written in 1776, describes the market's invisible hand representing the
A) King of England's control over the colonies. B) control all governments have in organizing the market. C) efficiency the market achieves without the interference of governments. D) inefficiency of markets when governments do not organize them. E) invisible command system that efficiently allocates resources.
The classical model does not do a good job of explaining short-run fluctuations in the level of economic activity
a. True b. False
Speculative attacks:
A. can always be stopped by the country's central bank if they act quickly. B. can be triggered even when domestic policymakers are acting responsibly. C. are illegal, and if caught, speculators are assessed large fines. D. can only result from irresponsible fiscal policy.
An important assumption in the theory of public choice is that
A. scarcity does not exist in the government sector. B. individuals will only operate outside the political process when their well-being is involved. C. individuals will act within the political process to maximize their collective well-being. D. individuals will act within the political process to maximize their individual well-being.