​If the Bidders at an Oral Auction Have True Values

question 90

Multiple Choice

​If the bidders at an oral auction have true values of $8,$7,$6,and $5,the item will sell for

• A)​$8
• B)$7
• C)just over $7
• D)​just under $7

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually do pay.

Producer Surplus

The difference between what producers are willing and able to sell a product for and the actual price they receive, indicating the benefit to producers.

Welfare Loss

A decrease in economic efficiency that occurs when there is an optimal allocation of resources that is not achieved due to various reasons such as externalities or market failure.

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that categorizes human needs into a five-level model, ranging from basic physiological needs to self-actualization.