A Dealer Decides to Sell an Oil Painting by Means

question 20

Multiple Choice

A dealer decides to sell an oil painting by means of an English auction with a reservation price of slightly below $100,000. If she fails to get a bid as high as her reservation price, she will burn the painting. There are two bidders. The dealer believes that each bidder's willingness to pay will take one of the three following values: $120,000, $100,000, and $25,000. The dealer believes that each bidder has a probability of of having each of these three values. The probability distribution of each buyer's value is independent of that of the other's. Assuming that the two bidders bid rationally and do not collude, the dealer's expected revenue from selling the painting is slightly less than

• A) $110,000.
• B) $100,000.
• C) $89,000.
• D) $80,000.
• E) $81,666.67.

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Definitions:

Epidermis

The outermost layer of skin, acting as a barrier against environmental threats.

Apocrine Sweat Glands

Specialized sweat glands that usually open into hair follicles, found primarily in the underarms and genital area, secreting a milky sweat that can produce body odor when broken down by bacteria.

Eccrine Sweat Glands

These are responsible for producing sweat to help cool the body and are found throughout most of the body's skin.

Function

An action or activity assigned to or expected from a person or thing.