In an auction where the bidders values are 400, 500, 650, 800 and 850, the highest two bidders form a bid-rigging cartel. What would be the winning bid in this auction?
a. 501
b. 651
c. 801
d. 846
QUESTION 2The main reason(s) monopolies can earn positive profits for a while is(are)
a. assets cannot quickly move in and out of the industry when demand fluctuates
b. an increase in demand does not lead to entry of firms to absorb the extra demand
c. both A&B
d. none of the above
QUESTION 3In a sealed-bid first price auction, if you notice that your competition is weaker, you should
a. Shade your bid more
b. Shade your bid less
c. Bid more aggressively
d. Both B&C
QUESTION 4The main reason(s) firms in a competitive market cannot earn positive profits in the long run is(are)
a. assets can quickly move in and out of the industry when demand fluctuates
b. an increase in demand leads to entry of firms which absorb the extra demand
c. a decrease in demand leads to exit of firms from the market such that there is no surplus
d. all of the above
QUESTION 5In a sealed-bid first price auction, if you notice that your competition is stronger, you should
a. Shade your bid more
b. Shade your bid less
c. Bid more aggressively
d. Both B&C
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