Location Choice. Dallas currently has an NBA team (the Mavericks). Demand for Mavericks games in Dallas is given by: P_D(Q_D) = 160 - 2Q_D Austin does not currently have an NBA team, but they would like to attract the Mavericks. Demand for Mavericks games in Austin is given by: P_A(Q_A) = 180 - 2Q_A The marginal cost of production in both cities is constant at MC = 40. 1. Suppose first that no subsidies (i.e., bids) are allowed. a) Calculate the profits earned by the Mavericks in Dallas. b) Calculate the profits earned by the Mavericks in Austin. c) Will the team move to Austin? 2. Suppose now that cities can offer subsidies (i.e., bids) to attract the team. a) What is the highest subsidy that Dallas would offer the team to stay? b) What is the highest subsidy that Austin would offer the team to move? c) Will the team move to Austin? d) How much is the winning subsidy? e) What is the profit plus subsidy for the team? f) What is consumer surplus minus the subsidy? 3. Suppose that the consumer surplus in Dallas is actually 2000, but all other values remain the same. a) If subsidies are banned, where would the team locate? b) If subsidies are allowed, would the team move to Austin? c) If subsidies are allowed, how much is the winning subsidy? d) If subsidies are allowed, what is the profit plus subsidy for the team? e) If subsidies are allowed, what is consumer surplus minus the subsidy?