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Suppose you are interested in bidding on a piece of land and you know that one other bidder is interested. The seller has announced that the highest bid in excess of $10,000 will be accepted. The other competitor's bidding price for the land will vary evenly from $10,000 to $15,000.

a) What is expected value and standard deviation of the competitor's bid?

b) What is the probability that the competitor's bid will be less than $12,000?

c) What is the range for the middle 50% of the competitor's bids?

d) Suppose that you bid $14,000. What is the probability that your bid will be accepted? (i.e. that yours will be the winning bid)

e) The competitor has hinted that he will not go higher than $13,750. What is the probability that his actual bid is above $12,200?

f) You want the probability that your bid is higher than the competitor's bid to be at least 0.95. What should you bid to ensure this?

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Statistics and Probability, Statistics

Category:- Statistics and Probability
Reference No.:- M91011218

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