Suppose that there are two bidders with independent private values for the object. Each bidder's value for the object is either 5, 10, or 15. Each bidder knows their value for the object, but neither the other bidder or the seller know this value. Let's suppose that from the point of view of the other bidder and the seller each possible value has equal probability, i.e. 1/3 as values are drawn independently. So from the point of view of the seller there are 9 possible configurations of values for the two bidders ((5,5), (5, 10), ..., (15, 10), (15, 15))) each occurring with probability 1/9. As usual we will assume that a bidder with value v who has an opportunity to buy the object for a price of v will attempt to buy the object. So, for example, if a bidders value is v, the seller sets a reserve price of v, and the buyer has an opportunity to buy the good at the reserve price then the buyer will buy. (a) Suppose the seller sets a reserve price of 10. You are one of these bidders and your value is 15. How much should you bid? (b) Suppose the seller sets a reserve price of 0, or equivalently does not set a reserve price. What is the seller's expected revenue from the second price auction? (c) What is the seller's expected revenue if the reserve price is 10? (d) Instead of running an auction the seller could simply post a price for the object. Here is how posted prices work: If the seller posts a price p then if one of potential buyers wants to buy the object for a price of p that person gets the object and pays p