Answered: Potential Buyer-Related Issues with…

Business

Economics

Potential Buyer-Related Issues with Reverse Auctions

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Bill offers to sell his car to Tom for $9,000. Tom replies"Your price is too hight I will offer to buy your car for $8,000.Tom's response. a counteroffer a rejection of the original offer only. the creation of a new offer only. a refusal to deal
You take a position with a large real estate development company as your first job after graduation. Your first big assignment is to sell an office building – you have been informed the company’s cost into the building (and the bottom line price it is willing to accept) is $400,000. You have identified a likely buyer and you assess that his top price is either $500,000 with a probability of .3, $600,000 with a probability of .5, or $1,000,000 with a probability of .2. You have to commit to a posted price – what price will maximize your profitability?
See attachments for question context. Question: Some people advocated the following modifiction of the auction rule. A bidder cannot bid for only one object, i.e., if at some point in time he withdraws from the bidding race for one object, he automatically withdraws the race for the other object. Every other aspect of the auction, including how prices increase over time, does not change. What should a bidder do if his valuation for the two objects are 50 and 60, respectively? Explain. Does the auction lead to an efficient allocation? Explain.
ABC Company negotiates a 1% credit card discount. If a customer charges $1,000 on his VISA credit card, how much money will ABC receive? ABC Company negotiates a 1% credit card discount. If a customer charges $1,000 on his VISA credit card, how much money will ABC receive? Group of answer choices $900 $1,000 $10 $990
Consider a first-price sealed-bid auction with a reserve price. A single indivisible object is to be allocated. The reserve price r> 0 is a number set by the auctioneer in advance and known by all the participants. Each participant submits a bid inside a sealed envelope. The bids are submitted simultaneously and independently. The auctioneer collects all bids and selects the highest one. If the highest bid is no smaller than the reserve price, then the person with the highest bid pays their bid to the auctioneer and gets the object. Otherwise, if all the bids are smaller than the reserve price, then the auctioneer keeps the object and none of the participants pays anything. (a) Write down a game representing the sealed-bid first-price auction. You can assume that people have quasilinear utility over money. (b) Suppose that r = 0, is overbidding weakly dominated? Justify your answer. (c) Suppose that r = 0, is underbidding weakly dominated by truthful bidding? Justify your answer. (d)…
A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. If only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with a value of either $39 or $104, with both values equally probable. Without a reserve price, the second highest bid will be the price paid by the winning bidder. The following table lists the four possible combinations of bidder values. Each combination is equally likely to occur. On the following table, indicate the price paid by the winning bidder with and without the stated reserve price. Bidder 1 Value Bidder 2 Value Probability Price Without Reserve? Price with $104 Reserve Price? ($) ($) ($) $39 $39 0.25 $39 $104 0.25 $104 $39 0.25 $104 $104 0.25 Without a reserve price, the expected price is…
A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. If only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with a value of either $60 or $160, with both values equally probable. Without a reserve price, the second highest bid will be the price paid by the winning bidder. The following table lists the four possible combinations of bidder values. Each combination is equally likely to occur. On the following table, indicate the price paid by the winning bidder with and without the stated reserve price. Bidder 1 Value Bidder 2 Value Price Without Reserve ($) ($) ($) $60 $60 $60 $160 $160 $60 $160 $160 Probability 0.25 0.25 0.25 0.25 Without a reserve price, the expected price is $ expected price is larger_ the reserve price. Price with $160 Reserve Price With a reserve price of $160, the…
Consider the following situation: five individuals are participating in an auction for an old bicycle used by a famous cyclist. The table below provides the bidders' valuations of the cycle. The auctioneer starts the bid at an offer price far above the bidders' values and lowers the price in increments until one of the bidders accepts the offer. Bidder Value ($) Roberto 750 Claudia 700 Mario 650 Bradley 600 Michelle 550 What is the optimal strategy of each player in this case? Who will win the auction if each bidder places his or her optimal bid? If Claudia wins the auction, how much surplus will she earn?
The Dean is looking for a tenured professor to teacha course. Monetary incentives are needed to get someoneinterested, but how much? The Dean decides to use an auction to do thejob. Two professors, equally qualified, applied for the position. The twoprofessors are invited to covertly submit their bids to the Dean. The Deanwill give the position to the professor who submits the lower bid (if thereis a tie, the job is assigned randomly). The professor who gets the job willbe paid his/her own bid. Each professorís reservation value for teachingthe course is his/her private information. It is common knowledge thattheir reservation values are independently and uniformly distributed over[0,100]. So if a professor with a reservation value of 50 wins witha bid of 60, his payoff is 60 - 50 = 10. Please answer part b). (a) Find a Bayesian Nash equilibrium of the bidding game.(b) Suppose the two professorsíreservation values are 60 and 70, respectively. What are their bids in the Bayesian Nash…
John wants to buy a used car. He knows that there are two types of car in the market, plums and lemons. Lemons are worse quality cars and are more likely to break down than plums. John is willing to pay £10, 000 for a plum and £2, 000 for a lemon. Unfortunately, however, he cannot distinguish between the two types. Sellers can offer a warranty that would cover the full cost of any repair needed by the car for y ∗ years. Considering the type and likelihood of problems their cars can have, owners of plums estimate that y years of guarantee would cost them 1000y, owners of lemons estimate that the cost would be 2000y. John knows these estimates and decides to offer £10, 000 if a car comes with y ∗ years of warranty, £2, 000 if a car comes without warranty. For which values of y ∗ is there a separating equilibrium where only owners of plums are willing to offer the y ∗ -years warranty? Clearly explain your reasoning.
Please no plagiarism. I will scan your answer. What is meant by the game theory in economics. I need answer in detail.
Suppose you play a game with a spinner. You play each game by spinning the spinner once. P(red) = P(blue) = Ķ, and P(green) = . If you land on red, you pay 10 pesos. If you land on blue, you don't pay or win anything. If you land on green, you win 10 pesos. What is the expected profit of the game?