The Economics of Sports
6th Edition
ISBN: 9781138052161
Author: Michael A. Leeds, Peter von Allmen, Victor A. Matheson
Publisher: Routledge
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Chapter 4, Problem 10P
To determine
Explain that an individual ‘R’ increase profit
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The demand for seats per game, at a local stadium that seats a maximum of 40 million per game, is P = 22 – 0.2Q where P is the price of a ticket and Q represents the number of seats (expressed in millions). Assume that all seats and all games are the same, and marginal cost = $10 = average cost. Calculate the maximum profit per game if the local stadium is owned by a monopolist charging the same price for each seat.
A university football team faces the following demand schedule shown for tickets for each home game it plays. The team plays in a
stadium that holds 60,000 fans. It estimates that its marginal cost of attendance, and thus for tickets sold, is zero. The table below
reflects this data:
Price per Ticket ($) 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.
The 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…
Chapter 4 Solutions
The Economics of Sports
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