Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 2: Location Choice. Dallas currently has an NBA team (the Mavericks). Demand for Mavericks games in Dallas is given by: PD(QD) = 160 2QD

Problem 2: Location Choice. Dallas currently has an NBA team (the Mavericks). Demand for Mavericks games in Dallas is given by:

PD(QD) = 160 2QD 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: PA(QA) = 180 2QA

The marginal cost of production in both cities is constant at MC = 40.

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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Economics Of The Sulphur Industry

Authors: Jared E Hazleton

1st Edition

1317353927, 9781317353928

More Books

Students also viewed these Economics questions

Question

0.58/3 % of $1500 is what amount?

Answered: 1 week ago

Question

The role of life: It consists of your own service to yourself.

Answered: 1 week ago