Part 1 (60 points) Circle the letter corresponding to the correct response. In t
ID: 1120425 • Letter: P
Question
Part 1 (60 points) Circle the letter corresponding to the correct response. In the presence of external benefits, a sports franchise's profit-maximizing attendance level a. will necessarily be 0 b. will fall short of the socially optimal level of attendance c. will be equal to the socially optimal level of attendance d. will exceed the socially optimal level of attendance 1. A monopsony employer of labor a. employs labor such that wage > marginal revenue product b. faces a flat marginal cost of labor curve c. faces an upward-sloping labor supply curve d. reflects all of the above 2. Over 150 U.S. counties have populations greater than 300,000. Approximately what percentage of total payroll do sports account for in these counties? a. over 50 percent b. 25 percent c. 5 percent d. less than 1 percent 3. A monopolistic sports franchise that uses an all-or-nothing approach a. creates more consumer surplus than exists without this approach b. sells less output than is consistent with MR MC, at the profit maximizing price c. sells more output than buyers desire, at the profit-maximizing price d. sells the profit-maximizing output level, but operates in the inelastic portion of demand 4. In contemporary major league baseball, the reserve clause a. ensures that players have the right to free agency after six years of experience b. ensures that star players earn no less than the average salary of players of comparable 5. experience c. assists in the creation of competitive balance in major league baseball d. does not existExplanation / Answer
1> B
Reason
In the presence of positive benefit, the socially optimum outcome is greater than the profit maximizing outcome.
2> D
All of the characteristics reflect the fact there is a single buyer of a particular type of labor.
3> B
That follows the rule and regulation.
4> A
In the profit-maximizing monopoly, the producer can bargain more to earn more profit out of it.