Suppose a government wishes to auction 5 million bonds (quantity), and three would-be buyers submit the following bids:

In a uniform-price auction,

Question

Suppose a government wishes to auction 5 million bonds (quantity), and three would-be buyers submit the following bids:

In a uniform-price auction,

Quizplus · Accepted Answer

In a uniform-price auction, all winning bidders pay the same price, which is equal to the lowest winning bid. In this case, both Buyer A and Buyer B submit winning bids of $1,000, so they both pay that price. Buyer C's bid of $990 is not enough to win a bond in this auction. Therefore, the correct answer is B, with both buyers A and B paying $1,000.

Suppose a Government Wishes to Auction 5 Million Bonds (Quantity)