The Table Above Lists the Independent Private Values of Five

question 74

Multiple Choice

The table above lists the independent private values of five participants in an auction. Each of the bidders only knows their o value and does not know the private values of the other participants.
-Refer to the table above. 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_______ .

• A)$3; $10 million
• B)#5; $10 million
• C)$3; $10.25 million
• D)#5; $10.25 million

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Definitions:

Machinery and Equipment

Physical assets used in the production process to manufacture goods or provide services.

Ordinary Maintenance

Routine or regular maintenance work performed to keep equipment, buildings, or machinery in operational condition.

Asset Improvements

Expenditures made to enhance the value, usefulness, or productivity of an asset over its original state.

Extraordinary Repairs

Significant expenditures that extend the useful life of an asset, improve its efficiency, or restore its capacity, distinguished from routine maintenance.