Back in 2007, William Beeny, the 81-year-old founder of a quirky roadside museum devoted to proving that Elvis Presley is still alive, put the museum's entire collection of Elvis memorabilia up for auction. The collection included photographs, books, yellowed news clippings, and replicas of Elvis' Cadillac. His wish was that the winning bidder would buy the collection and carry on his theory that the King never died. Beeny refused to put a value on his collection. "Value is in the eye of the beholder," he said. "One man's trash is another man's treasure." Suppose four individuals decided to participate in the auction and that their private values of the collection are as follows: Bidder Valuation Dimmy $147,000 Virginia $158,000 Burt $153,000 Hope $150,000 Which of the following statements is correct? O In a first-price sealed-bid auction, Virginia would win the collection but might end up paying more than $158,000 (winner's curse). O In an English Auction, Virginia would win the collection and pay slightly more than $153,000. In a first-price sealed-bid auction, Burt would win the collection but might end up paying more than $153,000 (winner's curse). O In a second-price sealed-bid auction, Burt would win the collection and pay $153,000. O In a second-price sealed-bid auction, Virginia would win the collection and pay $15,000. poi SW 1ALEarrange naver
Back in 2007, William Beeny, the 81-year-old founder of a quirky roadside museum devoted to proving that Elvis Presley is still alive, put the museum's entire collection of Elvis memorabilia up for auction. The collection included photographs, books, yellowed news clippings, and replicas of Elvis' Cadillac. His wish was that the winning bidder would buy the collection and carry on his theory that the King never died. Beeny refused to put a value on his collection. "Value is in the eye of the beholder," he said. "One man's trash is another man's treasure." Suppose four individuals decided to participate in the auction and that their private values of the collection are as follows: Bidder Valuation Dimmy $147,000 Virginia $158,000 Burt $153,000 Hope $150,000 Which of the following statements is correct? O In a first-price sealed-bid auction, Virginia would win the collection but might end up paying more than $158,000 (winner's curse). O In an English Auction, Virginia would win the collection and pay slightly more than $153,000. In a first-price sealed-bid auction, Burt would win the collection but might end up paying more than $153,000 (winner's curse). O In a second-price sealed-bid auction, Burt would win the collection and pay $153,000. O In a second-price sealed-bid auction, Virginia would win the collection and pay $15,000. poi SW 1ALEarrange naver
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Back in 2007, William Beeny, the 81-year-old founder of a quirky roadside museum devoted to proving that Elvis Presley is still alive, put the museum's entire collection of Elvis memorabilia up for auction. The collection included
photographs, books, yellowed news clippings, and replicas of Elvis' Cadillac. His wish was that the winning bidder would buy the collection and carry on his theory that the King never died. Beeny refused to put a value on his
collection. "Value is in the eye of the beholder," he said. "One man's trash is another man's treasure."
Suppose four individuals decided to participate in the auction and that their private values of the collection are as follows:
Bidder
Valuation
Dimmy
$147,000
Virginia
$158,000
Burt
$153,000
Hope
$150,000
Which of the following statements is correct?
O In a first-price sealed-bid auction, Virginia would win the collection but might end up paying more than $158,000 (winner's curse).
O In an English Auction, Virginia would win the collection and pay slightly more than $153,000.
In a first-price sealed-bid auction, Burt would win the collection but might end up paying more than $153,000 (winner's curse).
O In a second-price sealed-bid auction, Burt would win the collection and pay $153,000.
O In a second-price sealed-bid auction, Virginia would win the collection and pay $15,000.
poi
SW
1ALEarrange
naver
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