You are playing a game in which a dollar bill is auctioned. The ...

[Diane]

You are playing a game in which a dollar bill is auctioned. The highest bidder receives the dollar in return for the amount bid. However, the second-highest bidder must pay the amount that he or she bids, and gets nothing in return.
 
  The optimal strategy is: A) to bid the smallest allowable increment below 1.
  B) to bid nothing.
  C) to bid 0.99.
  D) to bid more than a dollar.

Question 2

The point price elasticity of demand is -1/2. The price of the product increases from 1.00 to 1.10. Given the information in Scenario 4.3, the quantity demanded will decrease by approximately:
 
  A) 5 units.
  B) 5 percent.
  C) 10 units.
  D) 10 percent.
  E) none of the above

[kardosa007]

Answer to Question 1

B

Answer to Question 2

B