The larger the number of bidders in a Dutch auction,________.
A) the lower is the maximum willingness to pay of each bidder
B) the smaller is the consumer surplus earned by the winner
C) the larger is the quantity offered by the auctioneer for auction
D) the lower is the value of the starting bid

Question

Quizplus · Accepted Answer

In a Dutch auction, as the number of bidders increases, competition among them also increases. This typically results in the winning bid being closer to the maximum willingness to pay of the highest bidder, thereby reducing the consumer surplus for the winner. The consumer surplus is the difference between what the consumer is willing to pay and what they actually pay.

The Larger the Number of Bidders in a Dutch Auction,________