Suppose that Hans and Frans are bidding for an 1878CC Morgan silver dollar. Hans knows that Frans is willing to pay $1,150. Frans knows that Hans is willing to pay $975. Suppose that the seller's reservation price is $800 and bids are in $100 increments. The winner of this sealed-bid, second-price auction will pay:
A) $900.
B) $1,000.
C) $1,100.
D) $1,200.
E) None of the above.

Question

Quizplus · Accepted Answer

Hans will bid $1,000, which is just enough to beat Frans's bid of $975. Since the seller's reservation price is $800, Hans will win the auction and pay $900.

Suppose That Hans and Frans Are Bidding for an 1878CC