A firm plans to bid Dollar 300 per kg. for a contract to supply 1,000 kg. of a metal. It has two competitors A and B and it assumes that the probability that A will bid less than Dollar. 300 per kg. is 0.3 and that B will bid less than Dollar 300 per kg. is 0.7. If the lowest bidder gets all the business and the firms bid independently, what is the expected value of the contract to the firm?

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
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Chapter1: Starting With Matlab
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A firm plans to bid Dollar 300 per kg. for a
contract to supply 1,000 kg. of a metal. It has
two competitors A and B and it assumes that
the probability that A will bid less than Dollar.
300 per kg. is 0.3 and that B will bid less than
Dollar 300 per kg. is 0.7. If the lowest bidder
gets all the business and the firms bid
independently, what is the expected value of
the contract to the firm?
Transcribed Image Text:A firm plans to bid Dollar 300 per kg. for a contract to supply 1,000 kg. of a metal. It has two competitors A and B and it assumes that the probability that A will bid less than Dollar. 300 per kg. is 0.3 and that B will bid less than Dollar 300 per kg. is 0.7. If the lowest bidder gets all the business and the firms bid independently, what is the expected value of the contract to the firm?
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