Suppose you bid $12,000. What is the probability that your bid will be accepted

Question

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 $13,250. If your objective is to maximize the expected profit, what is your bid?
SelectStay with your bid in part (c); it maximizes expected profitBid $13250 to maximize the expected profitItem 4

What is the expected profit for this bid (in dollars)?

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 $10,500 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $10,500 and $15,000.

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 $13,250. If your objective is to maximize the expected profit, what is your bid?
SelectStay with your bid in part (c); it maximizes expected profitBid $13250 to maximize the expected profitItem 4

What is the expected profit for this bid (in dollars)?

Explanation / Answer

a) probability that your bid will be accepted =(12000-10500)/(15000-10500)=1500/4500=0.33

b)  probability that your bid will be accepted =(14000-10500)/(15000-10500)=0.78

c)bid  to maximize the probability that you get the property =15000

d) Bid $13250 to maximize the expected profit

e)  expected profit =(16000-13250)*(13250-10500)/(15000-10500)=$1680.56

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.