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Consider a firm that produces and sells baseball gloves. Demand for baseball gloves takes the form: P = 300 - Q. The firm's total cost takes the form: TC = Q2, which means that its marginal cost takes

Consider a firm that produces and sells baseball gloves. Demand for baseball gloves takes the form: P = 300 - Q. The firm's total cost takes the form: TC = Q2, which means that its marginal cost takes the form: MC = 20. A. What is the profit-maximizing quantity of gloves for the firm to produce? B. What is the profit maximizing price for the firm to charge? C. How much profit will the firm make? 2. (10 pts) What is the present value of a $1,000 payment that will be made to you three years in the future if the discount rate is 5%? 3. (10 pts) The formation of a sports league gives the league monopoly power, which decreases consumer surplus. Illustrate and explain how the formation of a league could actually benefit consumers. 4. (10 pts) Consider a five team league with the following win percentages: Team 1:0.625 Team 2:0.545 Team 3:0.422 Team 4:0.378 Team 5:0.215 Calculate the Noll-Scully measure of competitive balance if each team plays a 30 game season. 5. (10 pts) Explain why competitive imbalance takes place. 6. (10 pts) Explain Rottenberg's Invariance Principle. 7. (10 pts) is a salary cap an effective way to create competitive balance? Explain. 8. (10 pts) Consider a team selling tickets to a game. Suppose there are two groups of fans: a high- willingness to pay group that has demand P = 300 - , and a low-willingness to pay group that has demand P = 100 - Q. Suppose that the firm faces a constant marginal cost of 10. How many tickets will the team sell to each group and what price will they charge to each group? 9. (15 pts) Consider a country club that faces a demand for rounds of golf of P = 100 - 20. If the country club faces a constant marginal cost of 10, and engages in two-part pricing, what greens fee will they charge and what will be the membership fee?

1. (15 pts) Consider a firm that produces and sells baseball gloves. Demand for baseball gloves takes the form: P = 300 - Q.

May 11 2021 View more View Less

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