Gen Combo Looseleaf Microeconomics; Connect Access Card
Gen Combo Looseleaf Microeconomics; Connect Access Card
2nd Edition
ISBN: 9781260147186
Author: Dean S. Karlan Assistant Professor Of Economics
Publisher: McGraw-Hill Education
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Chapter 1, Problem 11RQ
To determine

To ascertain the reason behind offering a team bonus instead of individual bonus.

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Should free agency change the allocation of players across team? Will this effect competitive balance?
Understanding how shirking decreases team output Yvette sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Yvette realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Sean and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Yvette knows that if they both work hard, Sean will earn $100 on the beach and Yvette will earn $200 at her stand, so they will each take home half of their total revenue: $100+$2002=$150$100+$2002=$150. If Sean shirks, he'll generate only $60 in earnings. Yvette does not know that Sean estimates his personal cost (or disutility) of working hard as opposed to shirking at $25. Once out of Yvette's sight, Sean faces a dilemma: work hard (put in full effort) or shirk (put in low effort).…
Explain what the invariance principle is within the sports labor market? What does this mean about the measures leagues put into place to promote competitive balance, like the reverse order draft?
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