The Economics of Sports
6th Edition
ISBN: 9781138052161
Author: Michael A. Leeds, Peter von Allmen, Victor A. Matheson
Publisher: Routledge
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Question
Chapter 3, Problem 5P
To determine
The required number of ads to purchase as a group.
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The NHL faces a market demand curve given by P = 25000 – 0.01Q and a new rival league, the World Hockey League (WHL), is threatening to enter the market. Assume that both leagues face only fixed costs and they each have Cournot conjectures. What will be the profit-maximizing level of output and average ticket price for the NHL before the WHL enters the market? Show your work. After the WHL enters the market, work through the first four rounds of strategic pricing and output moves. Show your work. What will be the profit-maximizing output for each league and the average ticket price when all adjustments have been made? Show your work.
Consider the following graph:
AR, MR, ATC, MC
w*
W*
MC = ATC
AR=D
W
A
MR
a. Indicate the price a profit maximizing firm faces for a win, PPR. Shade in the area that indicates the team's
profit.
b. Indicate the price a win maximizing firm faces for a win, Pw. Shade in the area that indicates the team's
profit.
A university football team faces the following demand schedule shown for tickets for each home game it plays. The team plays in a
stadium that holds 60,000 fans. It estimates that its marginal cost of attendance, and thus for tickets sold, is zero. The table below
reflects this data:
Price per Ticket ($) Tickets per Game
100
80
60
40
20
0
Total revenue = $
20,000
40,000
60,000
80,000
100,000
Using this information, calculate how much total revenue the team will earn.
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- ASAP PLZ The NHL faces a market demand curve given by P = 25000 – 0.005Q and a new rival league, the World Hockey League (WHL), is threatening to enter the market. Assume that both leagues face only fixed costs and they each have Cournot conjectures. After the WHL enters the market, work through the first four rounds of strategic pricing and output moves. Show your work with the help of a table (Round 1 - 4; Quantity and price for each firm and for Round 1 - 4)arrow_forwardSuppose the typical Buffalo Bills fan has the following demand curve for Bills football games:P= 120-10G where G is the number of games the fans attend.If the Bills want to sell the fan a ticket to all eight home games, what price must they charge?arrow_forwardThe demand for NHL players can be written as: Qd=300-W , where Qd - number of players demanded by the league, W - wage of the player (you can think about it as of price). Marginal revenue: MR=300-2Q The supply of players: Qs=W, where Qs - number of players willing to play. ME=2Q . a) Imagine that both sides of the market are perfectly competitive. What is the equilibrium number of players in the league and what is the equilibrium wage? Show it on a graph. b) Imagine that players are represented by a union (monopoly), and the NHL teams compete for the players. What is the equilibrium number of players (Qu) and equilibrium wage (Wu) in this case? Show it on a graph. c) Imagine that NHL makes all the decision as a single entity (monopsony), and the players are not unionized. What is the equilibrium number of players (QNHL) and equilibrium wage (WNHL) in this case? Show it on a graph. d) What is going to be the equilibrium number of players in the league and what is the…arrow_forward
- Suppose the Carrow Road stadium has a capacity of 50,000 seats and is used for sevengames a year. Three are Premiership games, with a demand for tickets (expressed in thousands)given by D = 150 − 3p per game, where p is the ticket price. Three of the other games are EastAnglia friendly matches with demand D = 90 − 3p per game. Finally, one is a Champion’s Leaguegame with a demand D = 240 − 3p. The costs of operating the stadium are independent of thenumber of tickets sold.(a) Determine the optimal ticket price for each game, assuming the objective is profit maximization.(b) Given that the stadium is frequently full, the idea of expanding the stadium has arisen. Apreliminary study suggests that the cost of capacity expansion would be £100 per seat per year.Would you recommend that the football club goes ahead with the project of capacity expansion?arrow_forwardd) Because of an increase in productivity, the amount of labor necessary to produce a game decrease. e) The consumers who play these games believe that a shortage of the games is developing in the economy. f) The federal government imposes a $5 tax per game on the manufacturers of electronic games.arrow_forwardOne of the reasons that the move of the Oakland Raiders to LA was blocked by the NFL was: The Raiders had a contract with the city of Oakland that still had five years left on it It would infringe on the monopoly of the LA Rams Oakland residents had signed a petition with over 100,000 signatures protesting the move. A majority of players on the team had not endorsed the movearrow_forward
- Syukri, Iqmal and Amir run the only shop in Wang Ulu. They sell electrical goods such as televisions, washing machines, etc. However, their objectives are different from each other. Syukri wants to make as much profit as he can. Iqmal wants to sell as many goods as he can without losing money, and Amir wants to earn as much revenue as he can. The graph below illustrates their respective profits. Note: The length of each square on the Y-axis represents RM100, and the length of each square on the X-axis represents 100 units 1 what is the profit for amir? 2 what is the profit for iqmal?arrow_forwardSyukri, Iqmal and Amir run the only shop in Wang Ulu. They sell electrical goods such as televisions, washing machines, etc. However, their objectives are different from each other. Syukri wants to make as much profit as he can. Iqmal wants to sell as many goods as he can without losing money, and Amir wants to earn as much revenue as he can. The graph below illustrates their respective profits. Note: The length of each square on the Y-axis represents RM100, and the length of each square on the X-axis represents 100 units 1 what is the profit for suykri?arrow_forwardSyukri, Iqmal and Amir run the only shop in Wang Ulu. They sell electrical goods such as televisions, washing machines, etc. However, their objectives are different from each other. Syukri wants to make as much profit as he can. Iqmal wants to sell as many goods as he can without losing money, and Amir wants to earn as much revenue as he can. The graph below illustrates their respective profits. Note: The length of each square on the Y-axis represents RM100, and the length of each square on the X-axis represents 100 units 1 what is quantity for syukri? 2 what is quantity for iqmal? 3 what is quantity for amir? 4 what is price for amir? 5 what is price for iqmal? 6 what is price for syukri? 7 what is the profit for amir? 8 what is the profit for iqmal? 9 what is the profit for syukri?arrow_forward
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