Ten bidders in an oral auction have the following values for an antique clock ($10,$9,$8,$7,$6,$5,$4,$3,$2,$1).If bidders of the $10 and $9 bids collude and bidders of the $3,$4,and $5 bids collude what will the winning price be?

Question

Quizplus · Accepted Answer

Colluding bidders means that they will coordinate their actions to ensure that one of them will win and they will split the cost amongst themselves. Thus, the two colluding bidders with the highest values, $10 and $9, will work together to win the auction. Since the other bidders do not have a combined value higher than $8, the colluding bidders will win and the price will be the next highest bid, which is $8. The collusion between bidders $3, $4, and $5 is irrelevant to the outcome, as they do not have a combined value high enough to win the auction.

Ten Bidders in an Oral Auction Have the Following Values