Advertiser A bids$0.45,Advertiser B bids$0.65,and Advertiser C bids$1.05. Which of the following is true in a second-price auction?
Choose an answer
Tap an option to check your answer.
Correct answer: Advertiser C wins and pays$0.66..
Why this is the answer
In a second-price auction, the highest bidder wins, but pays the price of the second-highest bid plus a nominal increment (often $0.01). Here, Advertiser C is the highest bidder at $1.05, so they win the auction. The second-highest bid is Advertiser B's at $0.65. Therefore, Advertiser C pays $0.65 + $0.01 = $0.66. The option "Advertiser C wins and pays $1.05" is incorrect because in a second-price auction, the winner does not pay their full bid unless it's also the second-highest bid. The option "Advertiser B wins and pays $0.66" is incorrect because Advertiser B is not the highest bidder.
Pass your exam — without the endless answer hunt
Get every verified question and explanation for this exam in one place, and save hours of prep. 1,000+ certifications · 20+ languages · free to start.
Pass your exam faster → No card needed