First forum visit ever. Questions

[SunDog]

I'm taking an online statistic course and am having a very hard time with it. I think my biggest problem is setting up the problems. Could someone help me?
For instance, here's one problem:
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 $10,000 will be accepted. Assume that the competitor’s bid x is a random variable that is uniformly distributed between $10,000 and $15,000.

A) Suppose you bid $12,000. What is the probability that your bid will be accepted?
B) Suppose you bid $14,000. What is the probability that your bid will be accepted?
C) What amount should you bid to maximize the probability that you will get the property?
D) Suppose you know someone who is willing to pay you $16,000 for the property. Would you consider bidding less than the amount in part (C)? Why or why not?

[Dragan]

I'm taking an online statistic course and am having a very hard time with it. I think my biggest problem is setting up the problems. Could someone help me?
For instance, here's one problem:
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 $10,000 will be accepted. Assume that the competitor’s bid x is a random variable that is uniformly distributed between $10,000 and $15,000.

A) Suppose you bid $12,000. What is the probability that your bid will be accepted?
B) Suppose you bid $14,000. What is the probability that your bid will be accepted?
C) What amount should you bid to maximize the probability that you will get the property?
D) Suppose you know someone who is willing to pay you $16,000 for the property. Would you consider bidding less than the amount in part (C)? Why or why not?

Because the random variable X is uniformly distributed between 10 and 15 then the probability of a bid's acceptance is 0 if X is less than or equal to 10. On the other hand, if the bid was greater than or equal to 15 then the probability of acceptance would be 1.

Values of X between 10 and 15 will have probabilities between 0 and 1. So, for example if X=12 (X=14) than the probability of acceptance would be p=0.40 (.80).

I suspect you can take it from here.

[SunDog]

Thank you for help. SunDog