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Auction aims for highest possible price, but economists made two wrong extensions. Some thought the price can be indefinitely increased according to demand; some recommended discount to the successful bidder. The former mistake stems from the misunderstanding that the vertical line is a supply; while the latter is actually the result of too much supply (it is not auction any more). When some scarce resource is auctioned, it may bring in revenue for a government. But, if the price is set too high that leaves no profit margin to the bidders, no one will want the auctioned objects. The results are: 1. shortfall of revenue; 2. resource wastage; and 3. downfall of the government.
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