Estimate P₁ − P₂ with 99% Confidence, Given That N₁

question 12

Essay

Estimate p₁ − p₂ with 99% confidence, given that n₁ = 50 and n₂ = 50 and the first sample has a proportion of 0.50 and the second sample has a proportion of 0.20

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Definitions:

Dutch Auction

Auction in which a seller begins by offering an item at a relatively high price, then reduces it by fixed amounts until the item is sold.

Winner's Curse

A situation in auctions where the winner tends to overpay due to overly optimistic valuation of the item.

First-Price

A type of auction in which the highest bidder wins and pays the price they bid.

Second-Price

A bidding strategy, often used in auctions, where the highest bidder wins but pays the price offered by the second-highest bidder.