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.

Recognize different industry types and the concept of defensive industries.

Understand the industry life cycle and its stages.

Describe the concept and implications of sector rotation.

Analyze the impact of macroeconomic indicators on the economy and individual businesses.

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Definitions:

Period Costs

Selling and administrative expenses incurred in marketing the product, delivering the product, or managing the company and not directly related to manufacturing the product.

Fixed Costs

Expenses that do not change in total regardless of changes in the volume of goods or services produced or sold.

Variable Costs

Costs that change in proportion to the level of production or business activity, such as raw materials and direct labor costs.

Variable Cost

Spending that rises and falls according to how much is produced or sold, including costs for labor and materials.