A Seller Decides to Sell an Object by Means of a Sealed-Bid

question 1

Multiple Choice

A seller decides to sell an object by means of a sealed-bid, second-price auction without a reservation price.There are two bidders.The seller believes that for each of the two bidders there is a probability of 1/2 that the bidder's value for the object is $600 and a probability of 1/2 that the bidder's value is $300.The seller believes that these probabilities are independent between bidders.If the bidders bid rationally, what is the seller's expected revenue from the auction?

• A)$360
• B)$450
• C)$375
• D)$600
• E)$420

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Definitions:

Specific Combination

A particular arrangement or union of varied elements or components.

Idea Generation

The creative process of generating, developing, and communicating new ideas, where an idea is understood as a basic element of thought that can be visual, concrete, or abstract.

Screening

The process of evaluating or testing a group of items, individuals, or actions to select those that meet certain criteria or standards.

Less Educated

Refers to individuals having received lower levels of formal education or training.