League model questions Flashcards
If ai = aj and bi = bj, how will the teams’ talent levels compare if they share the same objectives?
If both teams have the same demand parameters and follow the same strategy (profit-maximizing or win-maximizing), they will acquire the same level of talent.
If ai = aj and bi = bj, and one team is a win maximizer while the other is a profit maximizer, which team will acquire more talent?
The win-maximizing team will acquire more talent because it invests up to the break-even point, while the profit-maximizing team stops where marginal revenue equals marginal cost.
If ai = aj and bi = bj, and one team is a win maximizer while the other is a profit maximizer, how would each team’s level of talent compare to if both teams had the same objectives?
The win-maximizing team will acquire more talent than it would under a profit-maximizing strategy. The profit-maximizing team will acquire less talent than the win-maximizing team.
If ai = aj and bi = bj, do win-maximizing or profit-maximizing teams charge more for tickets?
Profit-maximizing teams charge higher ticket prices because they optimize price for revenue, whereas win-maximizing teams prioritize filling the stadium.
If ai > aj and bi = bj, which team acquires more talent if both share the same objectives?
Team i will acquire more talent since it has a stronger demand effect per unit of talent.
If ai > aj and bi = bj, and team i is a win maximizer while team j is a profit maximizer, which team acquires more talent?
Team i (win maximizer) will acquire more talent than team j (profit maximizer) because win-max teams spend until break-even.
If ai > aj and bi = bj, or if ai = aj and bi < bj, and team i is a profit maximizer while team j is a win maximizer, which team acquires more talent?
Team j (win maximizer) will still acquire more talent despite having a lower demand or higher price sensitivity.
If ai = aj and bi < bj, which team acquires more talent if both share the same objectives?
Team i will acquire more talent since its ticket demand is less sensitive to price (bi < bj).
If ai = aj and bi < bj, and team i is a win maximizer while team j is a profit maximizer, which team acquires more talent?
Team i (win maximizer) will acquire more talent, even though demand elasticity differs.
Under what conditions is competitive balance more equal or less equal?
More equal: When teams have similar ai, bi, cost structures, and share the same strategy. Less equal: When there are large differences in ai, bi (market size effects) or different objectives (win-max vs. profit-max).
Under what conditions is the sport more popular (i.e., more tickets sold)?
More tickets sold when: Teams invest more in talent. Ticket prices are set lower (win-max strategies). Demand sensitivity bi is lower (fans are less price-sensitive).
