Suppose there are nine sellers and nine buyers, each willing to buy or
sell one unit of a good,...

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Suppose there are nine sellers and nine buyers, each willing to buy or 
sell one unit of a good, with values {$10, $9, $8, $7, $6, $5, $4, $3, 
$2}. Assuming no transactions costs and a competitive marketWhat is the optimal bid–ask spread?a. $2 bid; $10 askb. $4 bid; $8 askc. $5 bid; $7 askd. $6 bid; $6 ask5.Now suppose that competition among several market makers forces the spread down to $2. How many goods are traded?a. Fiveb. Fourc. Threed. Two

David · Accepted Answer

Suppose there are nine sellers and nine buyers, each willing to buy or sell one unit of a good, with values 
{$10, $9, $8, $7, $6, $5, $4, $3, $2}. 
 Assuming no transactions costs and a competitive market What is the optimal bid–ask spread? 
a. $2 bid; $10 ask 
b.  $4 bid; $8 ask 
c.  $5 bid;

Suppose there are nine sellers and nine buyers, each willing to buy or sell one unit of a good, with values {$10, $9, $8, $7, $6, $5, $4, $3, $2}. Assuming no transactions costs and a competitive...

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