sports economics

Problem Set 1 Econ 4830

Due September 13 A hard copy can be turned in at class. You can also upload an entirely typed version to Carmen. Anything submitted to Carmen must be typed in order to be graded, including graphs.

1. Complete question 3.2 on page 86 of the textbook.

2. In 2009 the Yankees opened a new Yankee stadium. Among the features of the new stadium were field level luxury seats that were selling for thousands of dollars. Some commentators argued that the Yankees were losing out on potential profits by not filling the seats, since the marginal cost of selling those seats was zero. Draw a monopoly graph of tickets to show that the Yankees could still be maximizing the revenue from those seats, even if they are not selling out. Explain intuitively why this would happen.

3. You have been tasked with estimating the demand function of ticket sales for the Columbus Clippers (a regional monopoly). You found a demand function Pt = 3000 − 2Qt

(a) Draw the demand function

(b) Find and draw the Marginal Revenue function

(c) Assume the team wants to maximize revenue, what price should they charge for a ticket?

4. Unscrupulous ticket scalpers have been getting in fist fights outside of games. You suggest raising ticket prices to eliminate scalpers. Explain your suggestion.

5. Suppose you were tasked with deriving an equation to estimate ticket sales for minor league baseball teams to find cities with high revenue potential. Describe some of the variables you would include, what effect you expect those variables to have, and why. Include at least 3 variables other than the example. (For example: I would collect the population in each city to effect market size and therefore ticket sales. I anticipate cities with larger populations will have higher ticket sales.)