Consider the following statements about competitive bidding:
I. The higher the price that a company bids, the greater the profit if the firm gets the contract.
II. Bidding a higher price increases the probability of obtaining a contract.
III. A company that bids low to ensure acceptance of a contract may actually wind up bidding too low to make an acceptable profit.
Which of the above statements is (are) true?
A) I only.
B) II only.
C) III only.
D) I and III.
E) I, II, and III.

Question

Quizplus · Accepted Answer

Statements I and III are true because the higher the price a company bids, the greater the profit if the firm gets the contract, but bidding a higher price decreases the probability of obtaining a contract. A company that bids low to ensure acceptance of a contract may actually wind up bidding too low to make an acceptable profit.

Consider the Following Statements About Competitive Bidding