Which of the following best describes a buyer's premium?

A buyer's premium refers to the additional fee that a buyer must pay on top of the final bid amount when participating in an auction. This fee is typically expressed as a percentage of the final bid and is standard practice in many auctions. The buyer's premium is intended to cover the auctioneer's commission and administrative costs associated with conducting the auction.

This fee is crucial because it provides the auctioneer with necessary revenue that helps facilitate the auction process while also ensuring that sellers can receive a fair value for their items. Buyers need to be aware of this premium, as it impacts the total cost of their purchase. Understanding this concept is essential for anyone looking to engage in auction activities, as it plays a significant role in the overall pricing structure within the auction environment.