Scenario: Four friends-Tom, Bill, Jeff, and Roger-are participating in an English auction. Tom values the good being auctioned at $500, Bill values it at $210, Jeff values it at $350, and Roger values it at $625.
-Refer to the scenario above.If they are the only bidders in the auction and each bidder bids up to his value for the good,the winner will earn a surplus of ________.
A) $500
B) $625
C) $125
D) $150

Question

Quizplus · Accepted Answer

In an English auction, the winner is the person who makes the highest bid. In this case, since each bidder bids up to his own value for the good, the winner will be Roger who values the good at $625. However, since Roger only needs to pay the second-highest bid (which is $500 from Tom), he will only pay $500 for the good. Therefore, the surplus earned by the winner will be $625 - $500 = $125.

Scenario: Four Friends-Tom, Bill, Jeff, and Roger-Are Participating in an English