The foreclosure crisis has been particularly devastating in housing markets in much of the south and west United States, but even when analysis is restricted to relatively strong housing markets the numbers are staggering. For example, in 2017 an average of three residential properties were auctioned off each weekday in the city of Boston, up from an average of one per week in 2011. What is the probability that no more than two foreclosure auctions occurred on a randomly selected weekday of 2017 in Boston?
A) 0.1991
B) 0.2240
C) 0.4232
D) 0.5768

Question

Quizplus · Accepted Answer

The average number of auctions per weekday in 2017 is 3. Using the Poisson distribution, the probability of having no more than 2 auctions is the sum of probabilities of having 0, 1, or 2 auctions. This calculation results in approximately 0.4232.

The Foreclosure Crisis Has Been Particularly Devastating in Housing Markets