Imagine you are a buyer in a double oral auction with a reservation value of $17 and there is a seller asking for $11

If you accept this offer, you will gain ... $ (Enter your answer as an integer)

If you are the only buyer, and you know that the lowest ask price is $3, should you accept this offer?

A. Yes, since you will gain $14.

B. No, as the only buyer you can extract a lower ask price.

C. Yes, accepting an offer from any other seller will reduce your surplus.

D. Both A and C are correct.

Yes, since you will gain $14

Explanation:

1. We're going to get $6 in this case. Because our profit represents the difference in our readiness to pay and the cost charged by the seller.

2. As we are ready to sell the seller is now 3, from this contract we will receive $17-3 = $14.

Every other vendor would lower our $14 surplus

The tender price refers to a purchaser's highest price for money. The demand price corresponds to a seller's cheapest price for a product.

This is known as the spread, but the smaller the spread, the larger the visibility of the defence.