(b) Sam is in the market for a used motorbike. At a used bike shop, Sam roughly knows that the price of a used motorbike is between $40,000 and $48,000. If Sam believes that the dealer knows as much about the bikes as him, how much do you think that Sam is willing to pay? Explain. Assume that he only cares about the expected value of the bike he buys and that the bike values are symmetrically distributed.

(b) Sam is in the market for a used motorbike. At a used bike shop, Sam roughly knows that the price of a used motorbike is between $40,000 and $48,000. If Sam believes that the dealer knows as much about the bikes as him, how much do you think that Sam is willing to pay? Explain. Assume that he only cares about the expected value of the bike he buys and that the bike values are symmetrically distributed.

Name: (b) Sam is in the market for a used motorbike. At a used bike shop, S
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Description: (b) Sam is in the market for a used motorbike. At a used bike shop, Sam roughly knows that theprice of a used motorbike is between $40,000 and $48,000. If Sam believes that the dealerknows as much about the bikes as him, how much do you think that S

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Concept explainers

Contingency Table

A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.

Binomial Distribution

Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.

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Question

(b) Sam is in the market for a used motorbike. At a used bike shop, Sam roughly knows that the
price of a used motorbike is between $40,000 and $48,000. If Sam believes that the dealer
knows as much about the bikes as him, how much do you think that Sam is willing to pay?
Explain. Assume that he only cares about the expected value of the bike he buys and that the
bike values are symmetrically distributed.
(c) Sam now decides to go to a different town to search for a used motorbike and believes that the
dealer knows more about the used motorbikes than him. How much do you think that Sam is
willing to pay? Explain your answer. How can this be resolved in a competitive market?

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