Asked by Danny Nguyen on Sep 24, 2024
Verified
In an auction where the bidders values are $740,$700,$660,$650,$400,$325 and $300,the highest three bidders decide to form a bid-rigging cartel.What would the winning bid have been without the cartel?
A) $741
B) $701
C) $661
D) $631
Bid-rigging Cartel
A group of firms that illegally coordinate their bids to control market prices and eliminate competition in auctions or tender processes.
Winning Bid
The highest offer made in an auction that secures the purchase of the item or service.
Bidders Values
The subjective valuations that individual bidders assign to the item being auctioned.
- Recognize the potential for collusion and its impact on auction outcomes.
Verified Answer
MC
Maxine Chelsea2 days ago
Final Answer :
B
Explanation :
Without the cartel, the highest bid would come from the highest bidder, who values the item at $740. The winning bid would need to be just above the second highest bidder's value of $700, hence $701.
Learning Objectives
- Recognize the potential for collusion and its impact on auction outcomes.