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

question 15

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 $400 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)$325
• B)$400
• C)$350
• D)$320
• E)$340

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Definitions:

Deviance

Actions or behaviors that violate societal norms, which can range from minor breaches of etiquette to serious violations of law.

Socioeconomic Classes

Categories of people based on their economic status, often determined by income, wealth, occupation, and education.

Victimized

Having been made the target of wrongdoing or harm, often unjustly.

Schoolchild

An individual, typically a minor, who attends an educational institution such as an elementary or secondary school.