Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Suppose we are interested in bidding on a piece of land and we know one other bidder is in...

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 $10 200 will be accepted Assume that the

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, 200 will be accepted. Assume that the competitor's bid x is a random variable that is uniformly distributed between $10, 200 and $14, 700. 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 accepted (to 2 decimals)? c. What amount should you bid to maximize the probability that you get the property? 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 $13, 100. If your objective is to maximize the expected profit, what is your bid? What is the expected profit for this bid (to 2 decimals)?

Aug 01 2020 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions