Can the threat of a price war deter entry by potential competitors? The threat of a price war will deter entry if O A. it is credible. O B. price warfare is optimal for the incumbent. O C. price warfare would be suboptimal for the potential entrant. O D. both a and b. O E. all of the above. What actions might a firm take to make this threat credible? The incumbent might O A. develop a reputation for being rational. O B. make such a threat very loudly. O C. maintain flexibility for accomodation or price warfare. O D. invest in extra capacity to make price warfare irrevocable. O E. commit to playing the game a finite number of times.Why is the winners curse potentially a problem for a bidder in a common-value auction but not in a private-value auction? The winnel's curse is often a problem for bidders in common-value auctions but not for bidders in private-value auctions because 0 A. the sales price in a commonvalue auction is equal to the highest bidr but the sales price in a privatevalue auction is equal to the secondhighest bid. 0 B. the winner in a common-value auction is the one with the highest bid, but the winner in a private-value auction is the one with the second-highest bid. 0 6. bidders in a commonvalue auction do not know their own reservation price for the good on which they are bidding, but bidders in privatevalue auctions know theirorwn reservation price. CI D. bidders in a commonvalue auction do not knowI the exact value of the good on which they are bidding, but bidders in privatevalue auctions knowI their own individual valuation. CI E. the seller in a commonvalue auction solicits oral bids, but the seller in a privatevalue auction solicits sealed bids. You are bidding against five other bidders in an English common-value auction. You estimate the value of the item being auctioned to be $500, although you realize your estimate might be somewhat too high or too low. The highest bid you should make is O A. somewhat more than $500. O B. exactly $500. O C. somewhat less than $500. O D. zero, because you should not bid if you don't know the exact value