Scenario: Alice is participating in a Dutch auction for a painting. There are five other bidders, and Alice values the painting at $30,000.
-Refer to the scenario above.Which of the following will be true if Alice stops the auction at $30,000?

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum amount a buyer is willing to pay and the actual price paid. If Alice stops the auction at $30,000 (her maximum valuation of the painting), she is essentially paying the exact amount she values the painting at and therefore earns zero consumer surplus.

Scenario: Alice Is Participating in a Dutch Auction for a Painting