Betty has bid $2,000 on a painting that she is buying for investment purposes.If she has a 40% chance of winning the auction and the price paid by the auction winner is $1,500,the expected profit of the auction is:

Question

Quizplus · Accepted Answer

The expected profit is calculated by considering the probability of winning the auction and the difference between the bid amount and the actual price paid. Since Betty has a 40% chance of winning and the price paid is $1,500, if she wins, her profit would be $2,000 (her bid) - $1,500 (price paid) = $500. The expected profit is 40% of $500, which is $200.

Betty Has Bid $2,000 on a Painting That She Is