Final cumulative possible questions Flashcards
Suppose the large market team in a league had to send a lump sum of $15 million per
year to the small market in their league. According to our two team fixed talent model,
how would this affect competitive balance?
(a) It wouldn’t.
(b) The small market teams would improve at the expense of the large market teams.
(c) Both teams would improve winning percentages.
(d) Both teams would lose more games
(b) The small market teams would improve at the expense of the large market teams.
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 the stadium does not necessarily maximize revenue
Assume two firms are considering advertising. If neither firm advertises, they will each
earn $700. If one firm advertises and the other does not, then the advertising firm will
earn $600 and firm not advertising earns $400. If both firms advertise, they each earn
$450. What is the Nash Equilibrium?
(a) Both firms advertise
(b) One firm advertises
(c) Neither firm advertises
(d) None of the above
(a) Both firms advertise
Which of the following is caused by territory definition in professional sports leagues?
(a) Market power for franchises
(b) Competitive Imbalance
(c) Leverage for stadium subsidies
(d) All of the above
(d) All of the above
Which of the following indicates a high degree of competitive balance?
(a) A high standard deviation of winning percentage
(b) A gini coefficient of near zero for wins
(c) Long streaks of never, ever winning a superbowl
(d) None of the above
(a) A high standard deviation of winning percentage
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
(c) Elasticity must be greater than 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
Under which of the following scenarios would a subsidy be socially beneficial? (Assuming
the subsidy is correctly specified and the taxes necessary to pay the subsidy are a sunk
cost.)
(a) Consumer surplus is larger than the total subsidy cost.
(b) Marginal benefits to society are not all captured by ticket demand.
(c) Additional economic activity is large enough to justify the subsidy.
(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
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 describes sequencing value?
(a) Mike Ilitch owning both the Detroit Tigers and the Detroit Red Wings
(b) NBC following the Super Bowl with an episode of the office
(c) Fox running ads for The Simpsons during the super bowl
(d) B & C
(d) B & C
Which of the following policies restrict pay for players in the MLB?
(a) The draft
(b) Rookie contract structure
(c) luxury tax
(d) All of the above
(d) All of the above
Suppose a player enters forced salary arbitration in MLB. The team enters a proposed
contract of $5.5 million and the player enters $7.5 million. The arbitrator estimates the
players value at $6 million. What will his salary be?
(a) $6 million
(b) $5.5 million
(c) $7 million
(d) $4 million
(a) $6 million
Which best describes the Rottenberg invariance principle?
(a) MLB players under current contracts are traded to the teams for which they provide
the most value.
(b) MLB players are paid similar wages regardless of team.
(c) MLB players wages increased drastically when free agency was first introduced.
(d) Future MLB players are not well represented by the current union representatives.
(a) MLB players under current contracts are traded to the teams for which they provide
the most value.
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
(d) All of the above
What type of market does the NFL have in purchasing professional football labor?
(a) Monopsony
(b) Monopoly
(c) Competitive
(d) Competitive Monopoly
(a) Monopsony
Who owns the majority of Nationwide arena?
(a) Nationwide Insurance
(b) Columbus Blue Jackets
(c) Franklin County
(d) The state of Ohio
(c) Franklin County
Which best describes the consensus of cost benefit analysis for stadium subsidies?
(a) Stadium subsidies produce more revenue for the city than the city forfeits in subsi-
dies.
(b) Stadium subsidies are justified through additional development value
(c) Stadium subsidies are rarely justified
(d) Stadium subsidies can be justified by the state, but not the city, because neighboring
areas serve as free riders
(c) Stadium subsidies are rarely justified
Which best describes marginal revenue product for a baseball pitcher? (WAR=Wins
above replacement)
(a) WAR+Revenue per win
(b) WAR*Revenue Per Win
(c) WAR/Revenue per win
(d) Team Wins when player started Game * Revenue per win
(b) WAR*Revenue Per Win
What does The Case for Paying College Athletes by Allen Sanderson and John Siegfried
credit as the main force transforming college athletics from a ”cottage industry” to a
financial behemoth?
television revenue.
- the influx of media money significantly commercialized college athletics, turning it into a multibillion dollar enterprise
Give an example of evidence that NCAA sports affect academics beyond those participating in athletics.
2021 Cincinnati Bearcats football team
- that team went to the playoffs for the first time applications for the next fall went up 11% to about 23,000 applicants
What is the difference between development value and economic activity value for stadium
subsidies?
- development value: long term increases in property values, infrastructure, and private investment around the stadium area
- economic activity value: short term boost in local spending due to events held at the stadium
- key difference
:development value may generate sustained growth
:economic activity value may redistribute existing spending
Give an example of a short-run production cost and a long run production cost for an MLB team when the season is the short-run.
- short run: player salaries, travel, food, stadium operations
- long run: stadium renovations, new training facilities, investments
