Learn Before
Reserve Price
A reserve price is a minimum threshold price established by a seller in an auction. This price is typically kept confidential from the bidders. The item being auctioned will only be sold if the final bid meets or exceeds this reserve price.
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Social Science
Empirical Science
Science
Economy
CORE Econ
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.8 Supply and demand: Markets with many buyers and sellers - The Economy 2.0 Microeconomics @ CORE Econ
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Reserve Price
Factors Influencing Willingness to Accept (WTA)
Market for Second-Hand University Textbooks
Supply Curve
Methods for Selling a Privately-Owned Car
An individual is selling a vintage concert poster they own. They have a strong sentimental attachment to it and have decided they would rather keep it than sell it for anything less than $75. A collector initially offers $60, which the owner declines. Later, the collector increases their offer to $90, and the owner agrees to the sale. Based on this scenario, what is the owner's willingness to accept?
Comparing Seller Valuations
Seller's Decision Point
A seller's willingness to accept for a used bicycle is $100. If they successfully sell the bicycle for $120, it demonstrates that their true willingness to accept was $120.
Match each seller's scenario to their correct Willingness to Accept (WTA), which is the minimum price they would agree to sell their item for.
Evaluating Seller Success
The absolute minimum price a seller requires to sell a good or service, below which they would prefer to keep the item, is known as their __________.
A student is selling a used graphing calculator. They have determined that the absolute minimum price they would sell it for is $50. Arrange the following events in the logical order they would occur for a successful transaction to take place from the seller's perspective.
Inferring Seller Valuation
An individual is selling a rare comic book. They have determined that the absolute minimum price they will part with it for is $500. They receive an initial offer of $450, which they immediately decline. A second potential buyer offers exactly $500. After considering the offer, the seller agrees to the sale. A third buyer then contacts the seller and offers $550, but the seller has already committed to the second buyer. Based on this information, what is the seller's willingness to accept?
Learn After
Reserve Price and Willingness to Accept (WTA)
Auction Outcome Analysis
Strategic Implications of a Reserve Price
A seller lists a rare collectible for auction. They secretly decide they will not sell it for less than $500. The public bidding starts at $1 and the highest bid at the end of the auction is $475. What is the most likely outcome of this auction?
In an auction, if the final highest bid for an item is lower than the seller's confidential minimum price, the seller is legally obligated to complete the transaction with the highest bidder.
Purpose of a Reserve Price in Auctions
Match each auction outcome description to the most logical conclusion about the seller's confidential minimum price.
In an auction, the confidential minimum amount a seller is willing to accept for an item, below which the item will not be sold, is known as the ____.
A seller is auctioning a vintage watch and has set a confidential minimum price they are willing to accept. Arrange the following events in the logical order they would occur, assuming the final bid is high enough for the item to be sold.
Evaluating a Seller's Reserve Price Strategy
A seller is planning to auction a unique piece of art and is considering setting a confidential minimum price below which they will not sell the item. What is the fundamental trade-off the seller must analyze when making this decision?