How do auctions help in price discovery?
What will be an ideal response?
Auctions help in price discovery for goods that do not have well-established prices. For example, for a good that may interest only a few buyers, like a painting, an auction might be a good way of discovering what the appropriate price will be and finding the right buyer. In general, it is common for goods that are unique, with relatively few buyers, to be auctioned.
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According to Say's Law, supply creates its own demand
a. True b. False
For an imaginary economy, when the real interest rate is 7 percent, the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500 . Currently, the nominal interest rate is 9 percent and the inflation rate is 4 percent. Currently,
a. the market for loanable funds is in equilibrium. b. the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, and as a result the real interest rate will rise. c. the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, and as a result the real interest rate will fall. d. the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, and as a result the real interest rate will rise.