EBK THE ECONOMICS OF SPORTS
6th Edition
ISBN: 9781351684491
Author: LEEDS
Publisher: YUZU
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Question
Chapter 3, Problem 1P
To determine
The effect of locating a second team in the same city.
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There is often only one major league baseball team in a city. What effect does this have on ticket prices?
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
Graph Input Tool
Market for Triple Sevens's Hotel Rooms
500
I Price
(Dollars per room)
450
200
400
Quantity
Demanded
(Hotel rooms per
night)
300
350
300
250
Demand Factors
200
150
Average Income
(Thousands of
dollars)
Demand
50
100
Airfare from LAX to
LAS
(Dollars per
roundtrip)
50
100
+
50 100 150 200 250 300 350 400 450 500
QUANTITY (Hotel rooms)
Room Rate at
Exhilaration
(Dollars per night)
250
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Triple Sevens is charging $200 per
room per night.
If average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms demanded at the Triple Sevens
from
rooms per night to
rooms per…
The English Premier League currently has no salary cap but is considering implementing one. They are doing this, in part, to reduce payroll disparities across teams that create competitive imbalance.
How would the reduction in payroll imbalance affect the Gini Coefficient for the English Premier League?
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- 12. The Vanier Cup, the finals of Canadian University football, was held on November 26, 2016 at Tim Hortons Field in Hamilton, Ontario. The organizers learned a lot are already planning next year's event! Based on what they learned this year, they know that the demand function for tickets to the game will be given by q = 200, 000 - 10, 000p, where p is the price charged per ticket. The chief organizer for next year is an ambitious person who wants to set prices so as to maximize revenue. (b) Write down an expression for the inverse demand function (price as a function of quantity), total revenue (as a function of quantity), and marginal revenue (as a function of quantity). Find the quantity and price that generate maximum revenue. (c) Derive an expression for the elasticity of ticket demand with respect to price. (Hint: your elasticity should be a function of the price, p.) What is the value of the elasticity at the revenue-maximizing price (your answer for price from part b)?arrow_forwardIs there an economic justification to pay the baseball player Alex Rodriguez $25 million a year? The quarterback Peyton Manning makes $14 million per year. Has this market gotten completely out of hand? Can there be any justification to some of the salaries paid? If so, what are the justifications? What impact do these salaries have on the sport? Are there good economic reasons for teams to pay these salaries?arrow_forwardSuppose that you have the following information about the market for players on your team: Supply: W=5+N Demand: W=35-2N a. Draw this graphically and calculate the equilibrium wage and number of players on the team. b. Suppose that the players union negotiates a roster size of only 5 players on a team. Draw this graphically and calculate the new equilibrium wage number of players on the team.arrow_forward
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