A passage with three blanks is given below, followed by options containing a single word. Choose the one word that can correctly fill all the three blanks. An _________ is a process of buying and selling goods or services by offering them up for bid and selling the item to the highest bidder. In a Dutch _________, the auctioneer begins with a high asking price and then lowers it until a participant accepts. In economic theory, an _________ may refer to any mechanism or set of trading rules for exchange.

Introduction / Context:
This question tests both vocabulary knowledge and the ability to read for meaning. The passage discusses a process of buying and selling with bidding, references a Dutch variant of this process, and finally links it to economic theory. You must find a single term that fits all three blanks and matches the real world and theoretical descriptions.

Given Data / Assumptions:

• The process involves bidding and selling to the highest bidder.
• A Dutch version of this process starts with a high price that is gradually lowered.
• In economics, the term can refer to a mechanism or set of trading rules.
• Options: Assets, Auction, Autarky, Arbitrage.

Concept / Approach:
An "auction" is the well known process of selling goods by receiving bids from buyers and awarding the item to the highest bid. A "Dutch auction" specifically starts with a high price and lowers it until a buyer accepts. In economic theory, auction models describe different mechanisms for allocating goods among bidders. The other options do not describe a bidding process. "Assets" are items of value, "autarky" is economic self sufficiency, and "arbitrage" is exploiting price differences across markets.

Step-by-Step Solution:
Step 1: Fill the first blank with "auction": "An auction is a process of buying and selling goods or services by offering them up for bid and selling the item to the highest bidder." This is a direct textbook style definition.Step 2: Fill the second blank in "Dutch auction". This is a recognised term where the auctioneer lowers the price until someone accepts it. None of the other options form such a known phrase.Step 3: Fill the third blank: "In economic theory, an auction may refer to any mechanism or set of trading rules for exchange." This is again consistent with the use of "auction" in game theory and microeconomics.Step 4: Test "assets" in the blanks. "An assets is a process" is grammatically wrong and conceptually meaningless. "Dutch assets" is not a recognised term, and assets are the goods, not the mechanism.Step 5: Test "autarky" and "arbitrage". Neither of them involves an auctioneer lowering or raising prices according to bids. Therefore, they fail the description of both the basic and Dutch versions.

Verification / Alternative check:
Recall standard phrases: "English auction", "Dutch auction", "sealed bid auction", "online auction". These all share the same root word and describe different rule sets for bidding. The passage explicitly defines this concept both in lay language and in the language of economic theory, which matches well known topics like auction theory in economics. This makes "auction" the only viable choice.

Why Other Options Are Wrong:
"Assets" are things that can be sold at an auction; they are not the process itself. "Autarky" refers to a situation where a country or region aims for economic independence and does not rely on trade; it is unrelated to bidding procedures. "Arbitrage" involves buying and selling in different markets to profit from price differences, but there is no auctioneer or bidding process in its basic definition.

Common Pitfalls:
Because some options are technical economic terms, candidates may be tempted to choose them without reading the passage closely. The key to such questions is to match not just one sentence but the entire description, including the mention of Dutch variants and the broader theoretical use. Only "auction" satisfies all of these conditions.

Final Answer:
The single word that correctly completes all three blanks is Auction, so option B is correct.