5. You are playing a game in which a dollar bill is auctioned. The highest bidder receives the dollar in return for the amount bid. However, the second-highest bidder must pay the amount that he or she bids, and gets nothing in return. The optimal strategy is:

A) to bid the smallest allowable increment below $1.

B) to bid nothing.

C) to bid $0.99.

D) to bid more than a dollar.

Answer:

True, False or Uncertain (15 points total or 3 points each)

Are each of the following true, false or uncertain? Justify your answer in two (2) sentences or less. If the answer is "false" you may provide a counter-example as justification

9. To maximize profits, a monopolist should charge as high a price as it likes.

10. In an industry with a dominant firm, the demand curve facing the dominant firm is identical to market demand.