Memphis Business Daily

**~ Does Anyone Know How To Solve This Stats Problem?~**?

You work for the Federal Communications Commission (FCC), and you are planning an auction of portions of the microwave spectrum. Telecommunications companies will submit bids. The number of companies that have filed the paperwork to bid is 5. The company that submits the largest bid will win the auction. Suppose that, for one particular item (one particular interval of the spectrum), bids are uniformly distributed between $0 and $2 billion. a.What is the probability that the winning bid will exceed $1.8 billion? b.What is the expected value of the winning bid?

Public Comments

1. Let X have the uniform distribution between α and β. the probability density function is: f(x) = 0 x < α f(x) = 1/(β - α) α ≤ x ≤ β f(x) = 0 x > β the mean is: (β + α) / 2 the variance is: (β - α)² / 12 here we have X ~ Uniform(0, 2) P(X > 1.8) = (2 - 1.8) / 2 = 0.2 / 2 = 0.1 = 10% the mean is (2 + 0 ) / 2 = $1 billion