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The marginal cost of production in each country is constant at MC = 20. Part 1. Suppose that countries are not allowed to submit bids to the World Cup Committee. a) What are the profits generated in each of the three countries? b) Which country will the World Cup Committee choose to host? part 2. Suppose now that countries are allowed to submit bids to the World Cup Committee. a) What is the highest amount that each country is willing to bid? (Assume that any value is derived from consumer surplus.) b) Which country will the World Cup Committee choose to host? c) What does the winning country bid in equilibrium? d) What is the profit plus bid for the World Cup Committee? e) What is the consumer surplus minus bid for the winning country? Part 3. Suppose that Russia already has sufficient stadium capacity, but Spain and Netherlands must each spend 300 on stadium building in addition to any bid they submit. a) What is the highest amount that each country is willing to bid? b) Which country will the World Cup Committee choose to host? c) What does the winning country bid in equilibrium? d) What is the profit plus bid for the World Cup Committee? e) What is the consumer surplus minus bid for the winning country?Problem 3. (25 points) Suppose there are two teams in the NHL. Each team has a monopoly in the product market with a demand curve given by: P(q) = 20-qu where q represents the number of games and P is the price per game. The production function for goalies is given by: 9(0) =1 That is, you need one goalie for each game. The supply curve for goalies is given by: w=8+LB where L = 61 + 62 is the total number of goalies, 61(62) is the total number of goalies hired by team 1 (team 2), and w is the wage in hundreds of thousands of dollars. Therefore, the total supply of goalies is L. Answer all problems in the units given in the problem. Don't worry if the numbers are in decimals. You could think of 0.5 or 0.3 of a goalie as a goalie who doesn't play the entire season in the majors. a (5 points) What is the equilibrium number of goalies for each team? b (2 points) What is the equilibrium wage? c. (2 points) What is the surplus (profit) for each team? Now suppose teams act as monopsonist in the labor market (ie., they collude). For your reference, the aggregate demand curve for labor is: w = 20 - L d (4 points) What is the equilibrium number of goalies for each team? e (2 points) What is the equilibrium wage? f (2 points) What is the surplus (profit) for each team? g (2 points) What is the best response for team 1 if team 2 sets the collusive amount of labor?1. Consider the (inverse) market demand function for the market in streaming services. P = 120 - 4Q Assume further that the available technology results in Marginal Cost equal to $40. @ Graphically show the market outcome for monopoly, Cournot oligopoly and perfect '_competition. b) For monopoly, Cournot duopoly and perfect competition determine the optimal ..outcome. Clearly explain how you arrive at your answer. What are the market price and quantity under each market structure? c) What are the consumer surplus, producer surplus and total surplus under each .--- scenario? d) Show the reaction function under Bertrand competition. What are the associated price . and quantity
