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.

Suppose that cities can offer subsidies (i.e., bids) to attract the team.

a) What is the highest subsidy that Los Angeles would offer the owners of the Chargers to move?

b) What is the highest subsidy that San Diego would offer the owners to stay?

c) Would the team move to Los Angeles?

d) How much is the winning subsidy?

e) What is the profit+subsidy for the team?

f) What is consumer surplus minus the subsidy?