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5 April, 11:15

In which of the following cases would a seller be least likely to use an auction to determine the price of an item? a. The item is unique and the seller is not certain what it is worth. b. Buyers' valuations of the item are interdependent. c. The seller is aware of each buyer's valuation of the item. d. The seller overpaid for the item initially and is trying to recover some of his losses.

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  1. 5 April, 11:39
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    The correct answer is the option C: The seller is aware of each buyer's valuation of the item.

    Explanation:

    To begin with, an auction is the process of buying and selling goods by offering them up for bid. There are many types of auctions but the main purpose of them all is to obtain the better price as possible for a good that is being shown and sold.

    To continue, in all of the cases presented above the one in where the seller would be least likely to use an auction to determine the price of an item would be in the case where the seller is aware of each buyer's valuation of the item due to the fact that if he already knows that then it will not make sense to use an auction because those procedures are used in order to obtain the higher price as possible by putting the buyers against each other, but how in this case the seller already knows how much every buyer will pay then the most reasonable thing to do is just sell it to the highest bidder.
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