Question

1. In a sealed??bid,second?price ?auction, you should bid

A. your estimate of what others value the good at.

B. the common value of the good.

C. your highest value.

D.one dollar more than your estimate of what the second-highest bid will be.

2. An auction in which the price announced by the auctioneer DESCENDS is called a

A.Dutch Auction.

B.Descending Option Auction.

C.Sealed Bid Auction.

D.English Auction

3.The ability to deter entry requires

A. a good lawyer.

B. a credible threat that if entry occurs the firm is willing to produce more than they would otherwise.

C. a clever accounting department.

D. a credible threat that if entry occurs the firm will not produce more than they would otherwise.

Answer 1

Answer-1 In a sealed bid second price auction bidder bids the highest value. It's the dominant strategy of the bidder to bid the highest value.

Therefore, the correct option is C) your highest value.

Answer-2 An auction in which the price announced by the auctioneer DESCENDS is called a Dutch Action. Price falls under Dutch Action untill the consumer is found.

Therefore, the correct option is A) Dutch Action.

Answer-3 The ability to deter entry requires a credible threat that if entry occurs the firm is willing to produce more than they would otherwise.

To deter the entry means to stop new firms from entering the industry. It requires a credible threat that it can divert the production decision and produce more.

Therefore the correct option is B.) a credible threat that if entry occurs the firm is willing to produce more than they would otherwise.