Auction is a method of selling goods in which people offer bids, and the item is sold to the person who makes the highest offer. Another form is the Dutch auction where the seller names a high price and gradually reduces it until someone makes a bid.
In the most popular of the methods in the auction, every subsequent bid is bigger than the last and the bids keep climbing until the highest bidder cannot be outbid anymore and s/he ends up winning the bid.
The bidding can happen with bids screamed out, placards held up as the auctioneer announces the bid or the potential buyers can place their bid electronically. There are e-biddings for auctions as well where the buyers can place their bids online for a product put up on a website.
There are three major types of auctions based on the number of buyers and sellers involved in the trade, and they are:- forward auction (one seller vs multiple buyers), reverse auction (multiple sellers vs one buyer) and double auction (multiple sellers and buyers).
For example, suppose, the owner is auctioning off an old antique car. The car is placed in front of the buyers gathered for the auction. After the auctioneer announces the beginning of the auction, the buyers can start placing bids.
The first buyer bids $50,000, the second one shouts $60,000, the third one goes for $80,000 and so on.
If the highest bidder is willing to pay $160,000 for the car at the end of the auction and nobody else is willing to bid any higher, the car will be sold to the highest bidder for one-sixty thousand dollars.
Use the Term in Sentences:
- Auction is often seen as an option for antique things because determining an absolute price right away seems rather troublesome.