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Chapter 5, Problem 11QP
To determine

Choice of college athletes.

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Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Economics (MindTap Course List)
Economics (MindTap Course List)
Supply, Demand, And Price: Applications. 11QP
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  • According to the readings, which of the following would likely NOT occur if college athletes could be paid in competitive markets? a. College coaches would earn lower salaries b. Subsidies from the academic side could increase c. Ticket prices would rise to cover the players’ salaries (assuming fan demand is unchanged) d. Fewer universities would have football programs
    Suppose Hinterland has been a closed economy (meaning there is no immigration from foreign countries and no international trade). The current labor force has 4 million skilled workers and 8 million unskilled workers. Both types of labor have perfectly inelastic supply curves, and the current skilled-unskilled wage ratio is 2.5. The elasticity of demand of skilled labor is -0.4, while the elasticity of demand of unskilled labor is -0.1. Suppose Hinterland allows a brief period of immigration, during which time 1 million skilled workers and 4 million unskilled workers migrate to Hinterland. Suppose there are no other changes to the economy. Approximately what is the new skilled-unskilled wage ratio? (Hint: The percent change in the wage ratio is approximately equal to the percent change in the skilled wage minus the percent change in the unskilled wage.)
    Which of the following is part of the impact of restricting payments to college athletes? a. All athletes are paid less than their marginal revenue products b. Athletic departments make greater profits, which allows them to subsidize the school’s academic mission c. The demand for tickets and broadcast rights have been found to rise because of the popularity of amateurism among fans d. Rents are transferred from players, who are disproportionately black, to coaches who are largely white
  • If the competition in the market increases: A) The price setting curve shifts downward B) The wage setting curve shifts upward C) The wage setting curve shifts downward D) The price setting curve shifts upward
    What economic principle justifies the high salaries of some professional athletes? Suppose the manager of a baseball team wants to hire a new pitcher for $4 million per year. Under what circumstances would it make sense for the team to do so? Assume that the government of the state of New Jersey has determined that a large number of injuries and deaths have occurred as a result of accidents involving the installation and repairs of electrical equipment at private residences. In reaction to this problem the state assembly decides to pass a law which requires that all certified electricians pass a tougher state licensing examination. Analyze the impact that this law is likely to have on the market for electricians and explain why safety may not necessarily improve. If the market price of the good or service that a firm produces increases, what happen to the demand of labor? Explain. Several cities across the United States have passed legislation to raise the living wage. How would this…
    The equilibrium wage rate in an industry is determined by a) whether workers or management are better at negotiating. b) finding where the market supply curve indicates that the substitution effect and income effect of a wage increase are offsetting. c) the strength of the substitution effect relative to the elasticity of demand for labor. d) the intersection of the market demand curve for labor and the market supply curve for labor.
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