What is the drawback of a bidder bidding up to his or her willingness to pay for a good in a Dutch auction?
What will be an ideal response?
A Dutch auction is a descending price auction. In this auction, the starting bid is set much higher than any bidder's willingness to pay. The auctioneer lowers the price until one bidder accepts the offer. If a bidder accepts the offer when price reaches her willingness to pay, she will earn zero consumer surplus. If she does not accept the offer, her chance of losing the auction increases as another bidder might accept the offer. However, not accepting the offer increases the chances of a positive consumer surplus.
You might also like to view...
If the automatic stabilizers are creating budget deficits, the economy must be experiencing falling output
a. True b. False Indicate whether the statement is true or false
Carl opens a 5-year CD for $1,000 that pays 3% interest compounded annually. What is the value of the CD at the end of five years?
a. $1,159 b. $1,126 c. $1,300 d. $1,150
Refer to Table 13-2. If the Hometown Bank is holding $10,000 in excess reserves, then the reserve requirement is
Table 13-2
| Hometown Bank | ||||
| Assets | Liabilities | |||
| Reserves | $25,000 | Deposits | $150,000 | |
| Loans | $125,000 | |||
Refer to Table 13-2. If the Hometown Bank is holding $10,000 in excess reserves, then the reserve requirement is
a. 2 percent.
b. 5 percent.
c. 7 percent.
d..10 percent.
Which one of these is not an economic function of the federal government?
A. redistribution of income B. stabilization C. economic regulation D. All are economic functions of the federal government.