Questions and Answers of The Economics Of Health And Health Care

Given the law of diminishing marginal returns, how should a team with a fixed salary budget allocate its payroll between offensive and defensive players?
The National Collegiate Athletic Association (NCAA) does not allow its members to play against schools that the NCAA does not certify. Is this a good idea? Why or why not
Some cities have several teams in England’s Premier League (the country’s top soccer league). Explain how this affects the monopoly power of those teams.
The marginal cost of admitting an additional fan to watch the Sacramento Kings play basketball is close to zero, but the average price of a ticket to a Kings game is about $60. What do these facts
The major North American sports leagues prohibit teams from locating within a specific distance of an existing team. Why do they have such a rule?
Use supply and demand to show why teams that win championships typically raise their ticket prices the next season.
Use a graph with attendance on the horizontal axis and the price of tickets on the vertical axis to show the effect of the following on the market for tickets to see the Vancouver Canucks play
Use the law of diminishing returns to explain why pro golfer Rory Mcllroy should not spend all of his practice time working on his putting.
Use a graph to show how the marginal product of offensive labor in the NEL might change if wide receivers in the NFL are no longer allowed to use gloves that make it easier to catch the ball on cold
The New York Jets football team raises ticket prices from $100 to $110 per seat and experience a 5 percent decline in tickets sold. What is the elasticity of demand for tickets?
Since the 1990s, many Major League Baseball teams have moved to new stadiums that are far smaller than the ones they have replaced. Use an appropriate graph to show what this has meant for ticket
Are the New York Yankees correct when they claim that revenue sharing simply rewards teams that do not try to win?
Would professional leagues behave differently if teams had corporate affiliation(e.g., the IBM Lions) rather than city or state affiliation?
Has the NFL been foolish to allow Los Angeles to go so long without a team?
Should the NBA or NHL switch to a promotion and relegation system?
If you were CEO of a company, would you spend $10 million per year to put your company’s name on a stadium?
Suppose that you are the owner of a professional baseball team in a major city, and MLB allows a second team to locate in your city. On what basis should you be compensated?
Draw a graph that shows the demand for seats at an NFL stadium. Show how demand for attendance at a given game would be affected if:a. The prices of parking and food at the games increase.b.
Some researchers argue that revenue sharing is like socialism in that it removes the incentive to outperform rivals. Do you agree with this statement? Why or why not?
Suppose that each team in a league has a demand curve for generic advertising(a league-wide, non-team-specific campaign) equal to Q = 1,000 — 5p. If there are 20 teams in the league, and ads cost
Use the marginal revenue and marginal cost curves from the economics of clubs to explain why the NFL has 32 teams, while Bundesliga-1, the top German soccer league, has only 20 teams.
Suppose that most of the teams in a given league are owned by individuals, while two are owned by corporations. If the profits of the individually owned teams rise, but that of the corporate-owned
Suppose an owner pays $500 million to purchase a hockey team that earns operating profits of $50 million per year. The new owner claims that $200 million of this price is for the players, which he
How can the San Diego Padres, one of the weakest teams in the National League from a wins-losses perspective, be one of the most profitable?
Why might a league favor a single-entity ownership model? Explain the differences in the risks and rewards of such a system compared to a franchise owner system.
Do you think that all professional sports should share baseball’s exemption from antitrust laws or that baseball should lose its exemption?
Is it fair to fans when teams create a bundle of more popular games and less popular games that must be purchased together?
Do you feel that leagues are better described as cartels made up of independent firms or as a single, multiplant firm?
What strategy would you follow if you were trying to create a rival basketball league?
Why do you think that antitrust lawsuits brought under the second clause of the Sherman Antitrust Act have generally been so unsuccessful?
An athletic director was once quoted as saying that he felt his school spent too much on athletics but that it could not afford to stop. Use game theory to model his dilemma.
You are the commissioner of the National Hockey League. You have been called to testify at an antitrust case against the NHL. Argue thata. The NHLis not a monopoly.b. Even if it is a monopoly, it is
Why can’t Premier League teams like Arsenal exert as much monopoly power as the NFL's Chicago Bears?
Suppose that the demand curve for tickets to see a football team is given by Q = 100,000 — 100p and marginal cost is zero.a. How many tickets would the team be able to sell (ignoring capacity
Why was the limited exemption from antitrust laws so crucial to the development of the NFL?
Suppose that all St. Louis Rams fans feel the same as Jane, who values every game at $28, regardless of the opponent. Can the Rams increase profits by bundling the Rams-Bears game with three others?
Suppose most fans prefer Sunday afternoon baseball games (regardless of opponent)to all other types of games. Describe two pricing strategies that a team could use to increase profits based on this
Suppose the typical Buffalo Bills fan has the demand curve for Bills football games:p = 100 — 10G, where G is the number games the fan attends.a. If the Bills operate in a perfectly competitive
Suppose the can segment their fans into young fans and senior citizens. Young fans have the demand curve 120 — 10G (MR = 120 — 20G). Senior citizens have the demand curve p = 60 — 10G (MR = 60
Suppose that, in order to protect Ronaldo from his adoring fans, soccer teams that host Real Madrid must hire extra security, and security costs go up as the number of fans at the game goes up. When
How far should leagues go to ensure parity among teams?
What do you believe means more to fans, winning the championship once in a while or being competitive every year?
Should Major League Baseball adopt a system of promotion and relegation?
Suppose, as an owner, you could leave the highly competitive league (in terms of closeness of contests) that you currently play in and enter a league that assured that your team would never lose
Explain how the law of diminishing returns provides a natural tendency toward competitive balance.
Suppose the winning percentages in a six-team league were as follows at the end of the season—Team A: 0.750, Team B: 0.600, Team C: 0.500, Team D: 0.500, Team E:0.400, Team F: 0.250. Compute the
In question 5.3, suppose each team plays a 50-game schedule. Compute the “ideal”standard deviation based on equal playing strength, and the ratio of the actual to the ideal.Data from question
If the NEL increased its schedule from 16 games to 36, what would the new benchmark ideal standard deviation be (assuming equal playing strength)?
Draw the Lorenz curves from Figure 5.2. Based on what you know from this chapter, add a Lorenz curve for the NFL and a Lorenz curve for the English Premier League.Why did you place them where you
Suppose that over five seasons, the order of finish for five teams in the West League and the East League are as follows. Use the HHI to determine which league has better competitive balance across
If you were a fan of Team A, which set of distributions shown in the previous question(West or East) would you prefer? Why?Data from previous questionSuppose that over five seasons, the order of
Go to the NFL regular season standings for 2009 (http://sports.espn.go.com/nfl/standings) and compute the standard deviation of winning percentage and the ratio of actual to ideal standard deviation.
Describe the externalities associated with a football stadium compared with an amusement park. Which would have greater positive externalities? Which would have greater negative externalities?
Suppose your city (or the nearest city housing an NBA franchise) is trying to decide where to build a new arena. Think of two or three possible sites and describe the pros and cons of each. Which
Who will benefit most from the new stadium in Minneapolis, the Vikings, their fans, or the city as a whole?
If you had a choice between your city’s (or the nearest large city’s) hosting either a sports franchise or a World Cup, which would be more beneficial to your city? Why?
Why is the multiplier effect for the Los Angeles Lakers likely to be greater than the multiplier effect for the Sacramento Kings even though they are both teams in the NBA? )
Why are the negative externalities associated the newly opened Barclays Centre in Brooklyn likely to be greater than the negative externalities associated with the Staples Center in Los Angeles,
If a majority of people do not want a stadium built in their town, how can building it lead to an improvement in social well-being?
While football and baseball teams have gone from multipurpose to football- and baseball-only facilities, basketball and hockey teams continue to share arenas. Why?
If the marginal propensity to consume in a municipality is 0.8, what is the value of the simple multiplier? If a new stadium that adds $30 million in new consumption expenditures is built, what is
Why does the fact that the NFL does not have a franchise in Los Angeles give its teams greater leverage with their host cities than teams in the other sports have?
If a new baseball stadium has only a very short-term impact on a team's attendance, why do MLB teams still pursue them?
Why would a Super Bowl played in Detroit probably have more of an impact than a Super Bowl played in Miami, even if both were to draw the same amount of fans? Why would a Super Bowl at Ford Field in
Are the stadiums or arenas of your local sports franchises located downtown or on the edge of town? Do you think that is the best place for them? Why or why not?
Standard economic theory is based on the assumption that people behave rationally.The winner’s curse implies that people behave irrationally by paying more for an asset than it is worth. Can we
What do you believe is more important in taxing the public to provide funds for stadiums—horizontal equity or vertical equity? Why?
How has your city raised funds to subsidize its sports facilities? Would you use a different method? Why?
Evaluate the following taxes from the standpoint of vertical and horizontal equity:a. A 25-cent per-gallon tax on milkb. A tax on stock market transactionsc. A sales tax on men's clothingd. A tax on
Suppose the demand for toothbrushes is perfectly inelastic, at Qd 3,000. The market supply curve is perfectly elastic and is equal to p = 2.00. What would be the deadweight loss associated with a
Suppose a city is laid out along a major highway, so the city is shaped like a straight- line segment rather than a circle. If the city wants to build a sports arena, where along the segment should
Suppose the International Olympic Committee announced that it would hold all of its Summer Games in Athens, Greece and all of its Winter Games in Sapporo, Japan. What is the likely impact on the
Use the rent gradient to show why New York did not build a new stadium for the Yankees in midtown Manhattan.
Your city is committed to raising $100 million for a new arena. The mayor suggests putting a tax on taxicab rides since out-of-towners disproportionately use taxicabs. Evaluate the wisdom of this
Use the all-or-nothing demand curve to explain why the IOC is unlikely to accept a bid by Los Angeles to host only the track and field events in its bid for the 2020 Summer Olympics.
Why might a city want to go into debt as a way to fund a new stadium?
Suppose New York wants to build a new facility to replace Madison Square Garden. Assume that the cost of building a new arena in midtown Manhattan is $2 billion and that all the costs occur right
Has the recent focus on measuring individual performance harmed professional sports?
Should baseball and football follow the example of the IOC and disregard records set by players who have used PEDs?
If PEDs do not cause irreparable harm to an athlete’s health, should they be permitted?
Are disproportionately high rewards to star athletes a bad thing for team sports?
Suppose that the market demand for baseball players is perfectly inelastic (vertical) at 750 players. If the market supply increases due to an increase in the number of avail- able international
Suppose that there are two types of players, good and medium. The team demand curve for top-quality players is Q = 27-5w, and the market supply of top players = is Q 4w, where w is the wage in
Based on the following player statistics, compute the Win Score values. Assuming the players have equal star power to attract fans and players are rewarded only based on Win Score values, which
Use a labor supply and labor demand graph to show the impact on salaries in the NBA of a strong economic recovery. Explain why the curves moved the way they did.
Explain and show using a graph why, at any given wage, a monopoly firm will hire less labor than the total employment if the industry were competitive.
Using a graph, show what happens to player effort in a tournament if the marginal cost-of-effort curve shifts upward.
Use the supply and demand model to explain why top athletes are paid less than top celebrities.
“Are salary caps good for professional sports? Would you want to have a salary cap in your job? If your answers differ, how do you justify the different answers?
Are unions good or bad for professional sports?
Should the government step in when there is a strike or lockout in professional sports?
Would a craft union or an industrial union be more inclined to argue against the designated hitter? Why?
Suppose that Congress repeals MLB's exemption from the antitrust laws. How might this affect the contract zone between MLB and the MLBPA?
MLB has adopted final offer arbitration because it fears that regular binding arbitration is addictive. In what way can binding arbitration be addictive? Why isn't FOA addictive?
Explain how each of the following would affect the NHLPA's bargaining position. a. Russia's Kontinental Hockey League signs a large number of NHL stars. b. A change in the tax laws increases the
In what way are sports unions like craft unions? In what way are they like industrial unions? In what way do they differ from both?
Use what you have learned to explain why "journeymen" in MLB earn 86 percent of their MRP while "apprentices" earn only 19 percent.
Use supply and demand curves to show how the ATP and the WTA increased the prize money offered on the men's and women's professional tennis tours.
Think of recent events from the sports industry that show a taste for discrimination. Do they represent consumer, employer, or employee discrimination?
Discuss the role of the media in shaping perceptions about racial and ethnic diversity in professional and amateur sports.

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