Which of the following statements is true?
A) In cases of auctions and bilateral negotiations, prices tend to approach the competitive equilibrium.
B) Bilateral negotiations allow a single buyer and a single seller to privately negotiate with bids and asks.
C) In auctions, buyers prefer buying from sellers with the highest ask prices.
D) In auctions, sellers prefer selling to buyers with the lowest bid prices.

Question

Quizplus · Accepted Answer

Bilateral negotiations involve private negotiations between a single buyer and a single seller with bids and asks. In auctions, however, buyers and sellers are anonymous and bids and asks are public. Choices A, C, and D are not true. In auctions, buyers prefer buying from sellers with the lowest ask prices, and sellers prefer selling to buyers with the highest bid prices. In cases of auctions and bilateral negotiations, prices may not always approach the competitive equilibrium.

Which of the Following Statements Is True