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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 $10,100 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $10,100 and $14,500.

Suppose you bid $12,000. What is the probability that your bid will be accepted (to 2 decimals)?
Suppose you bid $14,000. What is the probability that your bid will be accepted (to 2 decimals)?
What amount should you bid to maximize the probability that you get the property (in dollars)?
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 $13,050. If your objective is to maximize the expected profit, what is your bid?

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Statistics and Probability, Statistics

Category:- Statistics and Probability
Reference No.:- M91022724

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