Q1 A high-quality used bicycle is sold at the auction. There are two types of cyclists:...

 

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Q1 A high-quality used bicycle is sold at the auction. There are two types of cyclists: professional and recreational. A professional cyclist will pay $1000 for this bicycle, while the recreational cyclists will pay $200. If the bicycle is not sold at the auction, then the bicycle store will buy it for $100. The probability that a customer is a professional cyclist is 50%. Two customers participate in the auction. Q1.1 1 Point Method 1 The seller posts the price of $1,000. What is the expected revenue? O 1000 O 800 O 775 O 750 O 400 O 200 O 100 Q1.2 1 Point Method 2 The seller posts the price of $200. What is the expected revenue? O 1000 O 800 775 O 750 400 O 200 100 Q1.3 1 Point Method 3 The bicycle is sold at a sealed-bid second-price auction. What is the expected revenue? O 1000 800 O 775 O 750 400 200 O 100 Q1.4 1 Point Which method will the seller choose? O Method 1 O Method 2 O Method 3 Q1.5 1 Point At what recreational value the seller would be indifferent between Method 1 and Method 3? Enter your answer here Q1 A high-quality used bicycle is sold at the auction. There are two types of cyclists: professional and recreational. A professional cyclist will pay $1000 for this bicycle, while the recreational cyclists will pay $200. If the bicycle is not sold at the auction, then the bicycle store will buy it for $100. The probability that a customer is a professional cyclist is 50%. Two customers participate in the auction. Q1.1 1 Point Method 1 The seller posts the price of $1,000. What is the expected revenue? O 1000 O 800 O 775 O 750 O 400 O 200 O 100 Q1.2 1 Point Method 2 The seller posts the price of $200. What is the expected revenue? O 1000 O 800 775 O 750 400 O 200 100 Q1.3 1 Point Method 3 The bicycle is sold at a sealed-bid second-price auction. What is the expected revenue? O 1000 800 O 775 O 750 400 200 O 100 Q1.4 1 Point Which method will the seller choose? O Method 1 O Method 2 O Method 3 Q1.5 1 Point At what recreational value the seller would be indifferent between Method 1 and Method 3? Enter your answer here