Anna's Antiques expects to get three bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If three bidders show up at the auction and two of the bidders are low value,what would the winning price be?
A)Just above $100
B)$100
C)Just above $70
D)$70

Question

Anna's Antiques expects to get three bidders for the unique china teacup it sells.Each of the bidders can either have a high-value of $100 or a low-value of $70 with equal probability.If three bidders show up at the auction and two of the bidders are low value,what would the winning price be?
A)​Just above $100
B)$100
C)Just above $70
D)​$70

Quizplus · Accepted Answer

Since two of the bidders have a low-value of $70, it is more likely that the winning bidder will choose a bid at or just above the low-value price rather than going for the high-value price. Therefore, the winning price is likely to be just above $70.

Anna's Antiques Expects to Get Three Bidders for the Unique