What is the range of the number of bidders assumed in the model?

• A. One to ten bidders
• B. Two to eight bidders
• C. Three to six bidders
• D. Four to nine bidders

Answer: (B)

This question tests the assumed range of bidders in the auction model and how that influences competition and outcomes in the simulation. In an auction-based Monte Carlo setup, the number of bidders is a discrete input that shapes bidding dynamics and final prices. Having at least two bidders is essential to produce competitive bidding; with only one bidder there is no bidding interaction to model. The upper limit keeps the scenario realistic and manageable for the analysis, avoiding extremes where many bidders would change the behavior too much or require different modeling assumptions. Therefore, two to eight bidders provides a balanced, representative range that captures variation in competition without leaving the defined setup.

Other ranges either allow a non-competitive single-bidder case, omit the lowest competitive level (two bidders), or extend beyond the intended cap (nine or more bidders), which would not align with the model’s stated assumptions.