When Auctions, Such as Those Used on EBay, Are Used

question 118

Multiple Choice

When auctions, such as those used on eBay, are used to sell a product, then:

• A)information about consumers' true reservation prices is minimized.
• B)information about consumers' true reservation prices is revealed.
• C)consumers have an incentive to bid above their true reservation prices.
• D)consumers have an incentive to bid below their true reservation prices.

---

Definitions:

Incremental Borrowing Rate

The incremental borrowing rate is the interest rate a lessee would have to pay to borrow funds on a secured basis over a similar term, in a similar currency, to purchase or lease a similar asset.

Capital Lease

A lease agreement that is classified as a purchase by the lessee for accounting purposes, effectively treating the leased asset as owned property.

Executory Costs

Costs related to the unperformed obligations under a lease, typically including insurance, maintenance, and taxes.

Minimum Lease Payments

The lowest amount that a lessee is obligated to pay over the lease term for the right to use an asset.