[-/12.5 Points] DETAILS ASWSBE14 6.E.007. MY NOTES ASK YOUR TEACHER PRACTICE ANOTHER 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 $20,000 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $20,000 and $25,000. (a) Suppose you bid $21,000. What is the probability that your bid will be accepted? (b) Suppose you bid $24,000. What is the probability that your bid will be accepted? (c) What amount should you bid in dollars to maximize the probability that you get the property? $ (d) Suppose you know someone who is willing to pay you $26,000 for the property. What is the expected profit in dollars if you bid the amount given in part (c)? $ Find a bid in dollars which produces a greater expected profit than bidding the amount given in part (c). (If an answer does not exist, enter DNE.) $ Would you consider bidding less than the amount in part (c)? Why or why not? Yes. There is a bid which gives a greater expected profit than the bid given in part (c), and thus a higher expected profit is possible with a bid smaller than the amount in part (c). O No. The bid which maximizes the expected profit is the amount given in part (c), thus it does not make sense to place a smaller bid. Need Help? Read It Watch It