What is the probability that your bid will be accepted

Assignment Help Basic Statistics

Reference no: EM133907317

Assignment:

1. Suppose we are interested in bidding on a piece of land and we know one other bidder is interested. The seller announced that the highest bid in excess of $10,500 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $10,500 and $15,200.

a.Suppose you bid $12,000. What is the probability that your bid will be accepted (to 2 decimals)?

b.Suppose you bid $14,000. What is the probability that your bid will be accepted (to 2 decimals)?

c.What amount should you bid to maximize the probability that you get the property (in dollars)?

d.Suppose that you know someone is willing to pay you $16,000 for the property. You are considering bidding the amount shown in part (c) but a friend suggests you bid $13,250. If your objective is to maximize the expected profit, what is your bid?

What is the expected profit for this bid (in dollars)?

Reference no: EM133907317

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