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30. A dealer decides to sell an antique automobile by means of an English auction. There are two bidders. The dealer believes that there are only three possible values, $6,300, $3,600, and $1,800, that each bidder's willingness-to-pay might take. Each bidder has a probability of 1/3 of having each of these willingnesses-to-pay, and the probabilities for each of the two bidders are independent of the other's valuation. Assuming that the two bidders bid rationally and do not collude, the dealer's expected revenue from selling the car is approximately A) $4,950 B) $3,600 C) $2,900 D) $3,900 E) $6,300

30. A dealer decides to sell an antique automobile by means of an English auction. There are two bidders. The dealer believes that there are only three possible values, $6,300, $3,600, and $1,800, that each bidder's willingness-to-pay might take. Each bidder has a probability of 1/3 of having each of these willingnesses-to-pay, and the probabilities for each of the two bidders are independent of the other's valuation. Assuming that the two bidders bid rationally and do not collude, the dealer's expected revenue from selling the car is approximately A) $4,950 B) $3,600 C) $2,900 D) $3,900 E) $6,300

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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30. A dealer decides to sell an antique automobile by means of an English auction. There are two bidders. The dealer believes that there are only three possible values, $6,300, $3,600, and $1,800, that each bidder's willingness-to-pay might take. Each bidder has a probability of 1/3 of having each of these willingnesses-to-pay, and the probabilities for each of the two bidders are independent of the other's valuation. Assuming that the two bidders bid rationally and do not collude, the dealer's expected revenue from selling the car is approximately A) $4,950 B) $3,600 C) $2,900 D) $3,900 E) $6,300
Transcribed Image Text:30. A dealer decides to sell an antique automobile by means of an English auction. There are two bidders. The dealer believes that there are only three possible values, $6,300, $3,600, and $1,800, that each bidder's willingness-to-pay might take. Each bidder has a probability of 1/3 of having each of these willingnesses-to-pay, and the probabilities for each of the two bidders are independent of the other's valuation. Assuming that the two bidders bid rationally and do not collude, the dealer's expected revenue from selling the car is approximately A) $4,950 B) $3,600 C) $2,900 D) $3,900 E) $6,300
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