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Determine how to maximize the government revenue

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Question: The government is auctioning off oil leases at two sites: 1 and 2. At each site 10,000 acres of land are to be auctioned. Cliff Ewing, Blake Barnes, and Alexis Pickens are bidding for the oil. Government rules state that no bidder can receive more than 40% of the land being auctioned. Cliff has bid $10,000 per acre for site 1 land and $20,000 per acre for site 2 land. Blake has bid $9000 per acre for site 1 land and $22,000 per acre for site 2 land. Alexis has bid $11,000 per acre for site 1 land and $19,000 per acre for site 2 land.

a. Determine how to maximize the government's revenue.

b. Use Solver Table to see how changes in the government's rule on 40% of all land being auctioned affect the optimal revenue. Why can the optimal revenue not decrease if this percentage required increases? Why can the optimal revenue not increase if this percentage required decreases?

Reference no: EM131644358

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