In an Auction Where the Bidders Values Are $740,$700,$660,$650,$400,$325 and $300,the

question 18

Multiple Choice

In an auction where the bidders values are $740,$700,$660,$650,$400,$325 and $300,the highest three bidders decide to form a bid-rigging cartel.What would the winning bid have been without the cartel?​

• A)​$741
• B)$701
• C)$661
• D)​$631

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Definitions:

Law of Diminishing Returns

The principle that as investment in a single factor of production increases, holding all others constant, the incremental gains in output will eventually decrease.

Law of Diminishing Marginal Utility

states that as a person consumes more of a good or service, the utility (satisfaction) gained from each additional unit decreases.

Principal-agent Problem

A dilemma occurring when one person or entity (the agent), is able to make decisions on behalf of, or that impact, another person or entity: the principal.

Complementary Resource

A good or service that enhances the use or value of another good or service when the two are used together.