A homeowner has an offer to buy his house for $260,000. A realtor has informed the homeowner
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Question:
A homeowner has an offer to buy his house for $260,000. A realtor has informed the homeowner that if he is willing to leave the house on the market for another month, he will get between $245,000 and $270,000. Assume that the price that he will get by leaving the house on the market over the next month is uniformly distributed between $245,000 and $270,000.
a) If he leaves it on the market for another month, what is the probability he will get less than $260,000?
b) If he leaves it on the market for another month, what is the probability he will get more than $260,000?
c) What do the probabilities tell you about whether the homeowner should take the $260,000 offer or leave the house on the market for another month?
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