If the bidders at a second-price auction have true values of 78, 72, 66, and 65, the item will sell for
a. 78
b. just under 78
c. 72
d. just over 72
QUESTION 2According to the indifference principle, housing prices
a. tend to converge over time
b. tend to leave individuals indifferent about where they live
c. only tend to be different to compensate individuals for differences in living conditions
d. only B&C
QUESTION 3If the bidders at a second-price auction have true values of 8, 7, 6, and 5, the item will sell for
a. 8
b. 7
c. just over 7
d. just under 7
QUESTION 4The indifference principle states that
a. If an asset is mobile, then in the long run, it will be indifferent about where it is used
b. In the long run, a mobile asset will make the same profit, no matter where it goes
c. If an asset is mobile, then in the long run, it would stay with the first user
d. Only A&B
QUESTION 5The optimal bidding strategy for a second-price auction is
a. To bid your true value
b. To shade your bid well below your true value
c. To shade your bid just a little below your true value
d. To size up your competition to determine how much to shade your bid
QUESTION 6The concept of mean reversion is defined by
a. the tendency of profits to revert to zero
b. the tendency of costs to revert to zero
c. the tendency of economic profits to revert to zero
d. the tendency of profits to revert to negative
QUESTION 7A second-price auction
a. is also called a Vickrey auction
b. is where bidders submit increasing bids until all but one remains
c. is where the sole remaining bidder wins and pays his winning bid
d. all of the above
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