Suppose that San Diego currently has an NFL team (the Chargers), but the Chargers are seeking subsidies to build a new stadium. Demand for football in San Diego is given by: PS(QS) = 90 2QS Los Angeles is a city without an NFL team, but they want one. Demand for a football in Los Angeles is given by: PL(QL) = 70 QL The marginal cost in both cities is constant at MC = 20.

1. Suppose that all subsidies are banned.

a) What are the Chargers profits in San Diego?

b) What are the Chargers profits if they move to Los Angeles?

c) Is the team going to move to Los Angeles?