Problem_Set_5AK[1].pdf - ECON 149 Economics of Sports University of California Merced Professor Jason Lee Problem Set#5 ANSWER KEY You may work in small

Problem_Set_5AK[1].pdf - ECON 149 Economics of Sports...

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ECON 149: Economics of Sports University of California, Merced Professor Jason Lee Problem Set #5 ANSWER KEY You may work in small groups (2 to 3 students) to complete the homework. If you chose to work in groups be sure to include the names of all the students on the homework. Only one assignment needs to be submitted per group. Question #1: Monopsony: Graphical Example [10 Points] Currently the NBA has a monopsony in the market for NBA players. They are the only buyer of professional basketball players in North America. Suppose a new league is formed called the American Continental League that will compete with the NBA. Illustrate the impact that this new league will have on the labor market for professional basketball players. Clearly indicate the wage and number of players that would be hired in the more competitive labor market. Question #2: Monopsony: Numerical Example [17 Points] Suppose that the following equations describe the labor market for basketball players:
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