In an auction where the bidders values are $740,$700,$660,$650,$400,$325 and $300,the highest three bidders decide to form a bid-rigging cartel.What would the winning bid be in this auction?
A)$741
B)$701
C)$651
D)$631

Question

In an auction where the bidders values are $740,$700,$660,$650,$400,$325 and $300,the highest three bidders decide to form a bid-rigging cartel.What would the winning bid be in this auction?
A)​$741
B)$701
C)$651
D)​$631

Quizplus · Accepted Answer

The three highest bidders are $740, $700, and $660. If they form a cartel, they can agree to bid $1 more than the second-highest bidder among themselves. In this case, the winning bid would be $661. However, since the cartel members would be paying each other back the difference between their own bid and the winning bid, they want to keep the winning bid as low as possible to minimize their payments to each other. Therefore, they will instead agree to bid $1 more than the fourth-highest bidder among themselves, which is $650. Thus, the winning bid would be $651.

In an Auction Where the Bidders Values Are $740,$700,$660,$650,$400,$325 and $300,the