Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
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 $14,500. 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 accented (to 2 decimals)? c. What amount should you bid to maximize the probability that you get the property (in dollars)? 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. If your objective is to maximize the expected profit, what is your bid? Select What is the expected profit for this bid (in dollars)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advances In Mathematical Economics Volume 19

Authors: Shigeo Kusuoka, Toru Maruyama

1st Edition

4431554890, 9784431554899

More Books

Students also viewed these Mathematics questions

Question

=+a) Is this an experiment or an observational study? Explain.

Answered: 1 week ago

Question

2. I try to be as logical as possible

Answered: 1 week ago