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 $9,800 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $9,800 and $14,800 . 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? $ 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 $12,900 . Which bid will give you the larger expected profit? What is the expected profit for this bid (to 2 decimals)? $
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.
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 $9,800 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $9,800 and $14,800 .
a. Suppose you bid $12,000. What is the
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?
$
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 $12,900 . Which bid will give you the larger expected profit?
What is the expected profit for this bid (to 2 decimals)?
$
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
