Scenario: Alice is participating in a Dutch auction for a painting. There are five other bidders, and Alice values the painting at $30,000.
-Beth is participating in a Dutch auction.Bidding starts at $500,and her maximum willingness to pay is $400.The total number of bidders participating in the auction is four.Her optimal bid strategy is to buy when the price reaches ________.

Question

Quizplus · Accepted Answer

In a Dutch auction, the price starts high and gradually decreases until a bidder is willing to pay the current price. Beth's maximum willingness to pay is $400, and there are four bidders participating in the auction. This means that the price will decrease in $100 increments ($500-$400=$100) until there is only one bidder left. 
Beth's optimal bid strategy would be to wait until the price reaches her maximum willingness to pay of $400, then bid the next lowest increment of $100, which is $300. Therefore, the answer is B.

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