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Darya [45]
3 years ago
15

Consider a second-price, sealed-bid auction with a seller who has one unit of the object which he values at s and two buyers 1,

2 who have values of v1 and v2 for the object. The values s, v1, v2 are all independent, private values. Suppose that both buyers know that the seller will submit his own sealed bid of s (and will keep the item if bid s wins), but they do not know the value of s. The buyers know that the seller must submit his bid before seeing the buyer’s bids and they know that the seller will actually run a second price auction with the three bids he has: his own bid and the two buyer’s bids. Each buyer knows his own value but not the other buyer’s value.
Now suppose that the seller opens the bids from the buyers and then submits his own bid after seeing the bids from the two buyers. The seller runs a second price auction with these bids in the sense that the object is awarded to the highests bidder (one of the two buyers or the seller) and that bidder pays the second highest bid. Now is it optimal for the buyers to bid truthfully; that is, should they each bid their true value? Give a brief explanation for your answer.
Business
1 answer:
dybincka [34]3 years ago
5 0

Answer and Explanation:

Given that this is a second price bid auction whereby the second highest bid is the price that the highest bidder pays for the item up for auction sale, so that b1>b2 then b1 gets item for the price of b2.

Truthfulness of true value is the dominant strategy here which means each player should aim to be truthful with their bid regarding their true value regardless of what other bidders are bidding. Therefore truthfulness of value is the optimal strategy with the best payoff for bidders

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You live in a town with 300 adults and 200 children, and you are thinking about putting on a play to entertain your neighbors an
vredina [299]

Answer:

Explanation:

a) To maximise profit, we would charge a price of 7 for adults and a price of 4 for children.

Profit would be = 7 x 300 + 4 x 200

Profit = 2900

This is the maximum profit other than fixed cost

b) If we have to keep one price of the ticket, then it would be 7. This would yeild a profit of 2100

c) From the law, the adults dont get any benefit, rather the children are in best position of free ticket

d) Fixed cost wont effect the answers above as long as the price and numbers of participants wont change

6 0
3 years ago
1. Classify the following manufacturing costs of Business Solutions as (a) variable or fixed and (b) direct or indirect. 2. Prep
Nat2105 [25]

Answer:

Cost of goods manufactured= $3,120

COGS= $2,750

Explanation:

<u>To calculate the cost of goods manufactured, we need to use the following formula:</u>

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

Cost of goods manufactured:

beginning WIP= 0

direct materials= 2,200

Direct labor= 1,000

Factory overhead= 520

Ending work in process= 600

Cost of goods manufactured= $3,120

<u>Now, we can determine the cost of goods manufactured:</u>

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 0 + 3,120 - 370

COGS= $2,750

4 0
3 years ago
Question 1 What forces have caused cost and management accounting systems designed decades ago to become less relevant and less
sergey [27]

Answer to Question 1:

The forces that had lessened the importance of the cost and management accounting systems in today's dynamic world are as under:

  • The ancient bookkeeping and the costing techniques were very time consuming and the accounting systems were also not integrated with the financial accounting systems. Today we have very robust and integrated systems which helps the management of the business operations nation wide with greater security and better performance than the previous old versions.
  • The complexity of the organization operations have resulted in origination of additional management accounting techniques that were adapted in the form of automated software, that are used to produce management reports on daily, weekly, monthly and yearly basis. The examples include the Throughput costing, Activity based costing, Bench-marking techniques, etc.
  • The activities automation has led to attaining of maximum efficiency possible in some areas which wasn't possible in the past. The robots management systems, activity automation, etc has increased the fixed cost share in the total cost and the variable cost has become a very minute share of the total cost of the activity. This variable cost which is often referred to as controllable cost, is very less in percentage share of total cost today than 10 years back. In the future, we will see it as a very very very small share of total cost. This makes the today's management costing techniques obsolete and requires new solutions, new techniques, new softwares, etc. to manage the companies operations.

Answer to Question 2:

The target costing is a costing technique that helps to reduce the cost of the company operations by setting cost targets for the operations. The first step under target costing is to set a selling price for the product and the second step is to set the target profit margin. Now at this position we are able to derive the target cost by taking the difference of profit margin and the selling price of the product. At this stage the actions and reforms required to achieve this target cost are determined and implemented in the current operating activities. The best part of the target costing is that it says that the pricing though matters but the main aspect of a product success is its cost controls. If the company is able to control the cost of the product then it can control the movement of prices in the market. So target costing specially focuses and stresses upon cost control procedures.

As Target costing is all about cost controlling and can be applied to any sector. In Ghana, target costing will help to control the cost of the services that the banking sector renders to its customers. This reduction in services cost can be achieved by automation, installation of new softwares, Investing in automated teller machines, etc. By gaining efficiencies, the banking sector will substantially reduce its cost thus achieving its target cost.

By achieving the target cost the bank will have to sell at the same rate as the bank had invested its time and money in efficiency gaining activities. There are a lot of activities and products that can be automated and that can help to achieve the target cost. For example, promoting internet banking will reduce the cost of ATM management, paper cost, management time, additional branch opening or extension of building, etc. We can see how easily internet banking will assist the banking sector to achieve its target costs.

5 0
3 years ago
A university has just hired additional faculty and staff. Who of the following is most likely to earn the highest pay?
Sladkaya [172]
I guess both the same pay,
cause the university tallies the amount of work to both of them
5 0
3 years ago
You will receive $5,000 a year in real terms for the next 5 years. Each payment will be received at the end of the period with t
photoshop1234 [79]

Answer:

$20,229.5

Explanation:

Given:

Amount to be received = $5,000

Time period, n = 5 years

nominal discount rate = 10.725%

inflation rate = 3 percent

Now,

Using the Fischer's relation, we have

1 + Nominal rate = ( 1 + Real rate ) × ( 1 + Inflation )

on substituting the values, we get

( 1 + 10.725% ) = ( 1 + Real rate ) × ( 1 + 3% )

or

1.10725 = ( 1 + Real rate ) × 1.03

or

( 1 + Real rate ) = 1.075

or

Real rate = 1.075 - 1 = 0.075 or 7.5%

Thus,

Present Value of an ordinary annuity that makes $5000 every year payment for 5 years will be calculates as:

Present value = Monthly payment × [\frac{(1-(1+r^{-n})}{r}]

or

Present value =5000\times[\frac{1 - (1 + 0.075)^{-5}}{0.075}]

or

Present value = 5000 × 4.0459

or

Present value = $20,229.5

3 0
3 years ago
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