Sports Economics

Sports Economics



Sports economics is concerned with - answers-a) The business aspects of professional
sports
b) The determination of player salaries
c) The optimal structure of sports leagues

ALL OF THE ABOVE

A monopolist maximizes profit by - answers-Setting marginal revenue equal to marginal
cost

Marginal revenue is - answers-Equal to the increment in revenue from selling one
additional unit of output

Monopoly pricing by a sports team - answers-a) Results in a price above marginal cost
b) Reduces consumer welfare compared to competitive pricing
c) Is possible because there do not exist perfect substitutes for individual teams

ALL OF THE ABOVE

Win maximization - answers-Should result in a higher winning percentage compared to
profit maximization, all else equal

Sports leagues enhance the overall profitability of member teams by - answers-a)
Allowing them to cooperate in a joint venture
b) Allowing them to act as a cartel
c) Enacting rules that coordinate playoffs, scheduling, and promotion

ALL OF THE ABOVE

Monopoly price discrimination for tickets to sporting events - answers-Means charging
different prices for the same seats to different types of consumers

Senior citizen discounts at sporting events - answers-a) Is an example of third-degree
price discrimination
b) Occurs if senior citizens have more elastic demands than other consumers
c) Is only profitable if senior citizen tickets are not transferrable to other consumers