An auction website charges $1 for a bid. The bidding starts at 1¢ and goes up 1¢ at a time. A television that is worth $2000 is
won, on average, with a bid of $160. You make one bid at random. Find the expected value of the outcome of the bid. (Write as an exact decimal, with a negative sign, if necessary.)
This is fairly complex, but looks like fun. So first lets count how many bids are made till the bidding goes up to 160. That is 100*160=16000 How much will be your random bid. Each bid has equal chance so it is the avarge of all bids. (1cent + 160dollars)/2 = 80dollars (rounded) What is your chance of winning: 1 bid wins out of 16000 so 1/16000. When you win your profit is 2000-80dollars=1920 1920/16000= 0.12 dollars You entering the bidding costs 1 dollar and your average win is 0.12 This the outcome is 0.12-1=-0.88 dollars
