1

a

%%🖋 Edit in Excalidraw%%

b

%%🖋 Edit in Excalidraw%% Demand curve is more elastic, because it’s a luxury good, and people are willing to buy less.

2

a

When a new purchaser of a good/service increases the value of the good/service to other owners. E.g. a new user on a social network increases the value to existing users. %%🖋 Edit in Excalidraw%%

b

The freemium model, because it makes it easy to acquire users and reach critical mass, and then effort can be put into converting them into paying users later.

3

a

English - auctioneer opens bid at specific value, decreasing until a bidder bids. Once a bidder bids, other bidders bid until no one is willing to bid higher, and the item is sold for the highest bid. Dutch - auctioneer opens bid at specific value, decreasing until a bidder bids. Once a bidder bids, the item is sold for that price. First-price Sealed Bid - Bidders submit a private bid, all bids are opened, and the highest bidder wins and pays their bid price. Second-price Sealed Bid - Bidders submit a private bid, all bids are opened, and the highest bidder wins and pay the second highest bid price.

b

FPSB and Dutch auctions.

c

Interdependent values mean that bidders’ own value of the object depends on information received from other bidders. English auction is best for sellers in this case, as other bidders bidding tends to increase the perceived value, resulting in higher bids overall.