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i stuck in this question please solve this question [This problem is worth 20 points] The National Basketball Association (NBA), sets a maximum salary cap
i stuck in this question please solve this question
[This problem is worth 20 points] The National Basketball Association (NBA), sets a maximum salary cap that a team can pay a player to provide basketball services. In an interview with CNBC in 2015, Vanderbilt Economist John Vrooman stated that Kevin Durant was paid "about half of what he is worth to the OKC Thunder because of the arbitrary individual salary cap (max salary) that is determined by his years in the league rather than his production." Based on this statement, assume that equilibrium salary in the market for NBA superstar players is greater than the NBA maximum salary. Specically, assume the equilibrium annual salary for NBA superstar players is $90 million and the maximum annual salary is $45 million. Assume that there only 20 NBA Superstars in the NBA. Part 1 (4 points): In the market for NBA Superstar Players, (3) what group would be represented by the demand curve and (b) what group would be represented by the supply curve? Part 2 (4 points) Draw the market for NBA Superstar Players using a market model that we discussed in this unit. On your model identify the equilibrium without the maximum salary ($90 million} and quantity (Q1). Part 3 (6 points): Using the same model you drew in Part 2. identify the maximum salary (Pmax), the quantity supplied of NBA Superstars (Q5) and the quantity demanded (Qd) of NBA Superstars. Part4 (4 points): Using economic concepts we've discussed in this unit, how would you describe the market with the maximum salary in place? Is the NBA Superstar market in equilibrium? Part 5 (2 points): Do you think the model you've analyzed in this problem explains the realities of the NBA Superstar Market? Explain one limitation of using this model to analyze this marketStep by Step Solution
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