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Solutions and summary to chapter Essay

The team owners initially obtain the rights to players through and annual draft that is used to allocate new players among the teams in the league. They also can obtain the rights to players by purchasing them room another team. Players do not like this process and often argue that they should be free to negotiate with all teams in the sporting league. In this case, they would be free to play for the team that offers the most desirable contract. Owners argue that his change in rights would have a negative effect on the distribution of talent across teams.

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In particular, they argue that all the good players would end up on rich, media center teams such as NY or LA (because the teams can pay higher salaries. ) The inequity of players across teams would make the sport less interesting to fans and thus destroy the league. Do you think the owner’s argument is correct? Explain. I believe the owner’s argument is correct. If all good players were in the same team or distributed among the two richest teams, this or these teams would always win amusement for consumers. 3-13. Locust Hill Golf Club is a private country club. It charges an initiation fee of $23,000.

When members quit the club, they receive no refund on their initiation fees. They simply lose their membership. Salt Lake Country Club is also a private golf course. At this club, members Join by buying a membership certificate from a member who is leaving the club. The price of the membership is determined by supply and demand. Suppose that both clubs are considering installing a watering system. In each case, the watering system is expected to enhance the quality of the golf course significantly. To finance these systems, members would pay a special assessment of $2,000 per year for the next three years.

The proposals will be voted on by the memberships. Do you think that the membership is more likely to vote in favor of the proposal at Locust Hill or for the one at Salt Lake country club? Explain. Locust Hill Club members have a greater power of acquisition compared to the embers of Salt lake Club, since membership at Salt Lake is determined by the market. Nevertheless, there are probably less members at Salt Lake than at Locust since Salt Lake members have to wait for a member to leave in order to enter the club while Locust Hill members Just have to pay an initiation fee to enter.

In this case, Salt Lake might be a more exclusive club, but it really depends on the pressure exerted by supply and demand so it can’t actually be determined. Due to this probable exclusivity of members at Salt Lake, the membership would probably vote in favor of Salt lake Club, whose members are more involved in club activities and desire to have a better club. Members at Locust Hill won’t leave the club since they would lose $23,000 on leaving and therefore if they don’t have a watering system they would still be members.

Members at Salt Lake without a watering system might consider selling their memberships and therefore the prices of these memberships would lower. 3-17. Two men, Robinson Crusoe and Friday, have been marooned separately on the same deserted island. There are two activities each man can undertake to obtain DOD: fishing and gathering coconuts. Robinson Crusoe can catch 40 fish per hour or gather 10 coconuts per hour. Friday can catch 10 fish per hour or gather 8 coconuts per hour. Answer the following questions: a) Who is more efficient in each activity?

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Could either or both of them benefit from meeting and deciding to form a trading relationship? Explain intuitively. Intuitively, Robinson is more efficient in both activities: fishing and gathering coconuts. Since Robinson can handle both activities allocating part of his time to fishing and other part of his time to gathering coconuts, he doesn’t need help and Hereford will not benefit from a trading relationship. Friday needs the trading relationship because he is not as efficient in any of the activities as Robinson.

In the case that Friday helped out Robinson and they formed a trading agreement, he fish the other half. B) Robinson and Friday have not yet met. Robinson is working 2 hours a day and producing (and consuming) 48 fish and 8 coconuts (note: the fish are very small. ) Friday is also working 2 hours a day, but he is producing and consuming 15 fish and 4 coconuts. Now assume that Robinson and Friday meet and develop a trading relationship. Come up with a production and trading scheme such that they can each work the same amount per day as before, but each is better off than before.

Provide specific numbers to show how they are better off. The way to obtain more fish and coconuts working together is for Robinson to solely fish during two hours per day and for Friday to solely gather coconuts for two hours a day, yielding 48 fish and 4 coconuts for each of them. 3-18. Suppose that annual demand in the U. S. Market for ice cream cones can be expressed as SQ = 800 + 0,21 – loop, where SQ is the number of cones demanded in lions of cones, I equals average monthly income in dollars, and P is the price in dollars per cone.

Supply can be expressed as SQ = 200 + 1 APP (with the same units for quantity and price. ) a) Graph the demand and supply curves for ice cream cones, assuming that the average monthly income is $2,000 and solve for equilibrium and quantity. The equilibrium of the market is given at a price of $4 per ice cream cone and a quantity supplied and demanded of 800 ice cream cones. B) Now assume that average monthly income drops to $750 and supply is unchanged. Draw the new demand curve on the same graph as used above and love for the new equilibrium price and quantity.

How would you describe the shift in demand intuitively? The equilibrium of the market is now at a price of $3 per ice cream cone and a quantity supplied and demanded of 650 ice cream cones. The Demand curve shifted to the left, indicating less quantity demanded and the supply curve remained the same. At the price of $4, when the average monthly income was of $2,000, the quantity of ice creams cones demanded was of 800, while when the income lowers to $750 at this price the quantity demanded of ice creams is of 550 ice cream cones.

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Solutions and summary to chapter Essay
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The team owners initially obtain the rights to players through and annual draft that is used to allocate new players among the teams in the league. They also can obtain the rights to players by purchasing them room another team. Players do not like this process and often argue that they should be free to negotiate with all teams in the sporting league. In this case, they would be free to play for the team that offers the most desirable contract. Owners argue that his change in
2018-10-23 16:15:20
Solutions and summary to chapter Essay
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