Exam 1 possible questions Flashcards
Which scenarios would lead to a revenue maximizing NBA owner raising prices?
(a) Price elasticity was less than one
(b) An NHL franchise leaves town
(c) An economic boom increases median income in the city
(d) All of the above
(d) all of the above
In which sports league are all broadcast rights sold nationally, by the league?
(a) NFL
(b) NHL
(c) MLB
(d) None of the above
(a) NFL
Which of the following is a result of price discrimination?
(a) Consumer surplus is decreased
(b) Revenue is increased
(c) Different types of consumers pay different prices
(d) All of the above
(d) all of the above
Which market type best describes an NFL franchise within its region?
(a) Monopoly
(b) Monopolistic Competition
(c) Perfect Competition
(d) Oligopoly
(a) monopoly
Which of the following best describes a natural monopoly?
(a) A single firm buys out all their competitors.
(b) A single firm can produce a better or cheaper product than many firms.
(c) Increasing ATC make a single firm more efficient.
(d) All of the above
(b) a single firm can produce a better or cheaper product than many firms
Which is true of marginal costs as a function of winning
(a) Marginal Costs are increasing
(b) Marginal Costs are not a function of wins
(c) Marginal Costs are typically a concave function
(d) Marginal Costs are largely determined by stadium costs
(a) marginal costs are increasing
Which of the following is a scarce resource in sports
(a) Athletic Talent
(b) Tickets
(c) Money
(d) All of the above
(d) all of the above
Mid-season the Columbus Crew decreased ticket prices and revenue was increased. What
does that tell us about demand?
(a) Tickets were originally priced above the demand curve.
(b) Price elasticity was elastic.
(c) The supply curve has shifted.
(d) None of the above
(b) price elasticity was elastic
Which is true when elasticity=1?
(a) Marginal Revenue= Total Revenue
(b) Marginal revenue = 0
(c) Marginal Revenue is maximized
(d) Marginal Revenue is positive
(b) marginal revenue = 0
Which professional sports league was granted an exemption from anti-trust laws by
congress?
(a) MLB
(b) NBA
(c) PGA
(d) NHL
(a) MLB
Which is a fixed cost in a season?
(a) Stadium
(b) Replacement Players
(c) Stadium Repairs
(d) All of the above
(a) stadium
Which describes the uncertainty of outcome hypothesis?
(a) Players fight for long term contracts, because performance is difficult to predict.
(b) Fans have demand for games with unknown outcomes.
(c) Owners cannot perfectly predict performance, therefore the correlation between
salary and wins is low.
(d) Anything can happen on a given day in major professional sports leagues
(b) fans have demand fro games with unknown outcomes
Which is true of open leagues?
(a) Open leagues typically have relegation and promotion.
(b) Open Leagues tend to have more competitive balance.
(c) Teams in open leagues hold more advantages than closed leagues when vying for
subsidies.
(d) All of the above
(d) all of the above
Which describes collusion among team owners in the NFL?
(a) TV Blackout areas
(b) Salary Caps
(c) The draft
(d) All of the above
(d) all of the above
Which statistic is higher when teams are more competitively balanced?
(a) gini coefficient
(b) Standard deviation of Winning Percentage
(c) HHI of championships
(d) None of the above
(d) non of the above
If the top five market size teams in MLB sent a $20 million check to the bottom five
market size teams every year, which would be the likely result, according to our model
for competitive balance?
(a) Competitive Balance would be unaffected.
(b) Win Percentage for the large market team will increase.
(c) Win percentage for the small market team will increase.
(d) Salaries (the price of talent) will decrease.
(c) win percentage for the small market team will increase
You have been tasked with estimating the demand function of ticket sales for the Colum-
bus Crew (a regional monopoly). You found a demand function Pt = 5000 − 2Qt. Which
describes marginal revenue?
(a) 2500 − 4Qt
(b) Q(5000 − 2Qt)
(c) 5000 − 4Qt
(d) 2500 − 2Qt
(a) 2500 - 4Qt
If a team is win maximizing, which is true?
(a) MC=MR
(b) MC=AR
(c) Price of Talent¿MC
(d) All of the above
(d) all of the above
What are open and closed league structures? Give an example of each. Explain
which structure makes it easier for teams to get cities to subsidize their stadiums and why.
- Open league structures: allows teams to be promoted or relagated, English Premier League
- Closed league structures: does not allow for promotion or relegation. teams are fixed in the league and membership is determined by other factors such as ownership, location, or historical performance, NFL
- Closed league strcutures would make it easier for teams to get cities to subsidize their stadiums because with an open league there is always a risk of teams being relegated, ehich could decrease revenue and the economic benefits that cities expect from hosting a top tier team
Which is true of marginal revenue when total revenue is maximized?
(a) Marginal revenue = 0
(b) Marginal Revenue is maximized
(c) Marginal Revenue is positive
(d) Marginal Revenue= Total Revenue
(a) marginal revenue = 0
Why would a rational franchise owner of an NFL team not lower ticket prices to fill a
stadium?
(a) Filling the stadium does not necessarily maximize revenue
(b) The owner wants to move to a new city
(c) The owner doesn’t care about ticket sales, just wins
(d) The competitive market has driven ticket prices to marginal cost
(a) filling a stadium does not necessarily maximize revenue
When a sports franchise is a monopoly and is maximizing revenue, which of the following
is true of the price elasticity of demand?
(a) Elasticity must be equal to one
(b) Elasticity must be less than one
(c) Elasticity must be greater than one
(d) There is not enough information given
(a) elasticity must be equal to one
Which of the following constitutes price discrimination for OSU football tickets?
(a) Student discounts
(b) Higher prices for better seats
(c) A higher price for the Michigan game
(d) All of the above
(d) all of the above
Which of the following increases player’s bargaining power in the NBA?
(a) A new basketball league, the ABA is formed.
(b) Expected career length is lengthened by medical advances
(c) Owners only receive stadium subsidies under the condition that 1 million people per
year attend games.
(d) All of the above
(all of the above)
