Assume That There Are 9 Bidders with Reservation Prices Independently

question 8

Multiple Choice

Assume that there are 9 bidders with reservation prices independently and uniformly distributed between $100,000 and $180,000. What is the expected value of the sale price at an English auction?

• A) $140,000
• B) $160,000
• C) $164,000
• D) $172,000
• E) $175,000

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Definitions:

Free Trade

An economic policy that allows imports and exports between countries with minimal governmental restrictions or tariffs.

Consumer Surplus

The discrepancy between the sum consumers are ready and capable of paying for a service or product and the sum they actually spend.

Producer Surplus

The discrepancy between what producers anticipate accepting for a good or service and what they end up being paid.

Imported Units

Refer to products or goods brought into a country from another for sale or use.