Chapter 5 and 6 Quiz

Question 1

Distinguish between variable ticket pricing and dynamic ticket pricing.

Answer 1

Variable ticket pricing is based on factors before the season starts and dynamic ticket pricing is based on factors during the season.

Question 2

Giving student discounts would fall under what price discrimination category?

Answer 2

Stage 3

Question 3

Which of the following is a limitation to spending money on players?

Answer 3

Profit mentality of the owner.

Question 4

Which of the following are reasons MLB was the first to implement dynamic ticket pricing?

Answer 4

MLB is subject to weather conditions

Question 5

What were the four main market structures discussed in class?

Answer 5

Oligopoly, Pure competition, Monopolistic Competition, Monopoly

Question 6

In the context of ticket sales, why is the marginal cost curve ‘L’ shaped?

Answer 6

Marginal cost zero until ticket sales achieve stadium capacity.

Question 7

How did the AL and NL monopolize the pool of talent?

Answer 7

By requiring players to sign a reserve clause

Question 8

Which of the following is NOT a reason an NFL team has market power in their host city?

Answer 8

They have competing leagues such as NBA, NHL, and MLB.

Question 9

Which of the following is a reason RSN’s give large market teams a competition advantage?

Answer 9

Only a small portion of the RSN revenue is shared with other teams.

Question 10

Which of the following are consequences of the leagues having market power?

Answer 10

All of the above are consequences of leagues having market power.

Question 11

Monopsony power comes from…?

Answer 11

Structure of free agency

Question 12

In the 1954 antitrust lawsuit against the NFL, how did the court rule in favor of the NFL?

Answer 12

The league was allowed to blackout out games in a team’s home market only when the team had a home game.

Question 13

Which of the following is NOT one of the four fronts that leagues typically violate antitrust laws?

Answer 13

Revenue

Question 14

In 2012, MLB was sued for antitrust practices because of TV programming prices. They were accused of violating section one. Which of the following were the key violations?

Answer 14

Required customers to purchase subscription for all out-of-market games, even if they were only interested in viewing one team.

Question 15

The consequences of accepting the all-or-nothing demand curve include:

Answer 15

Cost of stadiums shifted to tax payers

Question 16

What did the U.S. Supreme Court rule that MLB was exempt from antitrust law?

Answer 16

The court believed MLB was a public exhibition, thus exempt from antitrust law

Question 17

In the context of antitrust laws, why does the structure of the league matter?

Answer 17

A league ruled as a single entity is exempt from antitrust laws.

Question 18

Stages of price discrimination

Answer 18

Stage 1 - Find out what customer is willing to pay and charge them that

Stage 2 - Customer must meet certain conditions

Stage 3 - Customer belongs to a certain group and you get a discount