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 11P
To determine
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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…
Is it price discrimination when a professional football team charges, say, $150 per ticket for 50-yard-line tickets
in the lower deck and $50 per ticket for upper-deck tickets overlooking the end zone? Why or why not?
Is it price discrimination when a professional football team charges, say, $150 per ticket for 50-yard-line tickets in the lower deck and $50 per ticket for upper-deck tickets overlooking the end zone? Why or why not?
please explain it to me in 250 words
Chapter 4 Solutions
The Economics of Sports
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- A university football team faces the following demand schedule shown for tickets for each home game it plays. The team plays in a stadium that holds 60,000 fans. It estimates that its marginal cost of attendance, and thus for tickets sold, is zero. The table below reflects this data: Price per Ticket ($) 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.arrow_forwardIn North America, although sport teams have monopoly power, but they do not profit maximize. Outline reasons why they do not profit maximize on their ticket sales. Provide 5 bullet points.arrow_forwardThe market for full fare tickets (F)! Consider the following simplified scenario. Imagine that the Australian national rugby union (for short, Rugby AU) has exclusive rights to organize the games played by the national team. Rugby AU decides that the next match, between the Wallabies and the All Blacks (i.e., the Australian and the New Zeeland national rugby teams), will be hosted at the Marvel Stadium in Melbourne. Rugby AU has no fixed costs for organizing the game, but it must pay a marginal cost MC of $20 per seat to the owners of the Marvel Stadium. Two types of tickets will be sold for the game: concession and full fare. Based on any official document that attests to their age, children and pensioners qualify to purchase concession tickets that offer a discounted price; everyone else pays the full fare. The demand for full-fare tickets is QF(P) = 120 – 2P. 1e. Suppose that the government is looking to tax Rugby AU to raise revenue for building new sport facilities for kids…arrow_forward
- The market for full fare tickets (F) : Consider the following simplified scenario. Imagine that the Australian national rugby union (for short, Rugby AU) has exclusive rights to organize the games played by the national team. Rugby AU decides that the next match, between the Wallabies and the All Blacks (i.e., the Australian and the New Zeeland national rugby teams), will be hosted at the Marvel Stadium in Melbourne. Rugby AU has no fixed costs for organizing the game, but it must pay a marginal cost MC of $20 per seat to the owners of the Marvel Stadium. Two types of tickets will be sold for the game: concession and full fare. Based on any official document that attests to their age, children and pensioners qualify to purchase concession tickets that offer a discounted price; everyone else pays the full fare. The demand for full-fare tickets is QF(P) = 120 – 2P. The demand for concession tickets is QC(P) = 80 – 2P. 1. Lump sum tax (LS): Instead of a tax per unit, the government…arrow_forwardOn the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity t would be chosen if a monopolist controlled this market. Market Structure Price (Dollars) Quantity (Gyros) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is lower under a and the quantity is lower under aarrow_forwardOn the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Market Structure Price (Dollars) Quantity (Gyros) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a and the quantity is lower under aarrow_forward
- Use the graph to the right for a monopoly to answer the questions. What quantity will the monopoly produce, and what price will the monopoly charge? The monopoly will produce 84 units and charge $ 3.4 per unit. (Enter numeric responses using real numbers rounded to two decimal places.) Suppose the government decides to regulate this monopoly and imposes a price ceiling of $2.60 (in other words, the monopoly can charge less than $2.60 but can't charge more). Now what quantity will the monopoly produce, and what price will the monopoly charge? The monopoly will produce units and charge $ unit. per ...) cost per unit Price and 4.80- 4.40- 4.00- 3.60- 3.20- 2.80 2.40- 2.00- 1.60- 1.20- 0.80 0.40+ 0- 0 MC 16 32 48 60 72 84 96 108 120 132 14. Quantityarrow_forwardWhat can destroy monopoly position?arrow_forwardQuestion 4: The Baxter brothers - Bob, Bill, Ben and Brad – have just made a documentary movie about their basketball team. They are thinking about making the movie available for download on the internet. They can act as a monopolist if they choose to do so. Each time the movie is downloaded, their Internet Service Provider charges them a fee of $4. The Baxter brothers are arguing about which price to charge the customer per download. Here is the demand schedule for their film: Quantity of Downloads Denanded Price of Download $10 4 6. 2 10 15 a) Calculate the total revenue and marginal revenue per download. Price Quantity TR MR $10 6. 3 10 15 b) Bill is proud of the film and wants as many people as possible to download it. What price would he choose? How many downloads would be sold? c) Bob wants as much total revenue as possible. What price would he choose? How many downloads would be sold? d) Ben wants to maximize profits. What price would he choose? How many downloads would be sold?…arrow_forward
- The ultimate determinant of monopoly power is the firm’s elasticity of demand. What three factors determine a firm’s elasticity of demand? The ultimate determinant of monopoly power is the firm’s elasticity of demand. What three factors determine a firm’s elasticity of demand?arrow_forwardGraphically show a monopoly firm that currently sells 250 units of output at a price of $60/unit, where the marginal revenue of the 250th unit is $40, the marginal cost of the 250th unit is $50, and the average total cost at 250 units is $60. [Hint: Based on the information given, is the quantity you’re asked to show the profit-maximizing quantity? Think about what has to be true for profit-maximization.] Based on the graph and assuming the firm attempts to profit maximize (and succeeds), what would happen to price, quantity, MR, MC, and ATC? (rise, fall, or stay the same?)arrow_forwardThe table gives the monthly demand and costs for subscriptions to basic cable for Comcast, a cable television monopoly in Philadelphia. If Comcast maximizes its profit, how much profit will it earn?arrow_forward
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