Multiple Choice
Suppose there are 11 buyers and 11 sellers,each willing to buy or sell one unit of a good,with values {$14,$13,$12,$11,$10,$9,$8,$7,$6,$5,$4,}.Assume no transaction costs and a competitive market.If there is a market maker in this market.What is the profit maximizing bid-ask spread per unit for a market maker?
A) $6 bid;$12 ask
B) $7 bid;$11 ask
C) $8 bid;$10 ask
D) $9 bid;$9 ask
Correct Answer:
Verified
Correct Answer:
Verified
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