Question

Phrenal is selling a used laptop in an online auction. Phrenal has estimated the value of the laptop to be $100, but has seen other laptops of similar type and quality sell for both more and less than that amount. Phrenal hopes that the laptop will sell for $100 or more but is prepared to take less for it if nobody bids that amount. This is an example of ___________.

A) Reserve price auction
B) Fixed-price listing
C) Dutch auction
D) Silent auction

Answer 1

Phrenal selling a used laptop with an estimated value of $100 but willing to accept less is an example of a reserve price auction. option a.

Step-by-step explanation:

The student's example of Phrenal selling a used laptop in an online auction, where Phrenal has estimated the value to be $100 but is willing to sell for less if the bidding does not reach that amount, is an example of a reserve price auction. In a reserve price auction, the seller sets a minimum price (the reserve) that they're willing to accept. If the bids do not reach that price, the seller is not obligated to sell the item. This is different from a fixed-price listing, where a specific price is set, and a Dutch auction, where the price starts high and decreases over time, or a silent auction where participants submit bids without knowing the amount of competing bids.