In: Economics
Consider a 2-person private value, first-price auction. The object is worth $10,000 to bidder 1 who knows that bidder 2’s value is uniformly distributed between 0 and $40,000. Assume that bidder 2 is going to use his equilibrium bidding strategy.
a) What is bidder 1’s optimal bid for his value $10,000 and what is his expected payoff?
b) Assume that bidder 1 learns that the object is worth $22,000 to bidder 2 and in turn, bidder 2 is not aware that bidder 1 has this information and would therefore stick to his equilibrium strategy. How much should bidder 1 bid and what is his expected payoff?
c) Assume that bidder 1 learns that the object is worth $14,000 to bidder 2 and in turn, bidder 2 is not aware that bidder 1 has this information and would therefore stick to his equilibrium strategy. How much should bidder 1 bid and what is his expected payoff?
1) ans : D )The central concept underlying the production possibilities curve is that of limited resources.
as production possibility frontier tells about how much we cn produce give the resources.
2)ans :C )increases product supply.
as subsidy means reducing cost of supplier. So he produces more.
3)ans : A)increase.
By law of demand
4)ans :D)resources are perfectly shiftable (equally efficient) among alternative uses.
this is assumption production possibility curve
5)ans:B) enhances economic growth by increasing the probability that a person can gain from making investments today
As private property right gives sole right for profit.So this will make man investing and which increases growth
6)ans :D)shift outward
as growth inrease means production has increased. so it will sghift outward
7)ans :A) real per capita Gross Domestic Product (GDP) growth will be less than the growth of real Gross Domestic Product (GDP).
this is bcoz as percapita GDP = GDP/population .so if population increase, percapita gdp decreases
8) ans :D. )the rate of population growth increases at the same rate as economic growth.
this is based on empirical research