Pennsylvania Auctioneer Practice Exam

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What characterizes a reserve auction?

An auction where items sell for any price

An auction where the seller sets a minimum price that must be met for the item to be sold

A reserve auction is characterized by the seller setting a minimum price, known as the reserve price, that must be met for the item to be sold. This means that even if bidding occurs, the item will not be sold unless the bids reach or exceed that predetermined price. This format protects the seller from selling their item for less than they are willing to accept.

In contrast, auctions without a reserve price (often called absolute auctions) allow items to be sold for any price, regardless of how low the bids go. Therefore, the seller does not have the safety net of a minimum price. Furthermore, a reserve auction differs from an auction that requires pre-approval from a bank, which is related to financing rather than the bidding process itself. The primary distinction lies in the seller's ability to control the minimum selling price through the establishment of a reserve.

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An auction with no minimum price and immediate sale

An auction that requires pre-approval from a bank

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