Pennsylvania Auctioneer Practice Exam

What qualifies as an "absolute auction"?

1. An auction where bidding starts at a fixed price

2. An auction where the item is sold regardless of price

3. An auction that has no reserve price set

4. An auction limited to a specific type of item

The correct answer is: An auction where the item is sold regardless of price

An "absolute auction" is defined as an auction where the item is sold regardless of the final bid amount. This means that the seller has committed to selling the item to the highest bidder without any minimum price requirement. In practice, this assures bidders that they will win the item no matter how low the final bid may be, which can encourage more participation and potentially drive up the final sale price due to competitive bidding. When there is no reserve price, it aligns with the concept of an absolute auction; however, the emphasis here is on the unconditional sale, making it distinct from a situation where a starting price is fixed or a minimum sale price is established. Other options, like starting at a fixed price or being limited to specific types of items, do not inherently characterize an absolute auction, as these elements can exist in various auction formats.