The Following Graph Shows the Bid Value and Probability of Winning

question 56

Multiple Choice

The following graph shows the bid value and probability of winning an auction for an oil painting under a first-price sealed bid auction with private values. The bidder is willing to pay a maximum of £2000 for the oil painting. Refer to the graph to answer the question. The line S has a positive slope which shows that the _____.

• A) probability of winning the auction rises as the bidder increases the bid.
• B) the potential gains from winning the auction increases as the bid value increases.
• C) the private value of the bidder is influenced by the changes in the bid values.
• D) the optimal bid is equal to the bidder's maximum willingness to pay.

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Definitions:

Contributory Negligence

Contributory negligence is a legal doctrine where if the plaintiff is found to be partly at fault for the accident or damage, they may be barred from receiving any compensation from the defendant.

Dram Shop Acts

Laws that hold alcoholic beverage servers legally responsible for harm that intoxicated or underage patrons cause after being served alcohol.

Affirmative Defense

A defense in which the defendant introduces evidence, which, if found to be credible, will negate criminal or civil liability, even if it is proven that the defendant committed the alleged acts.

Negligence Claim

A legal assertion that one party's failure to exercise reasonable care has resulted in harm or injury to another.