HW 1 solution-1

HW 1 solution-1 - Homework 1 Solution 1. The Washington...

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Homework 1 Solution 1. The Washington Nationals sign Stephen Strasburg and quickly promote him to starting pitcher a. What is likely to happen to ticket prices of games? Why? Signing Strasburg will increase the demand, so you would expect ticket prices to increase b. After 5 years of great pitching, the Nationals resign Stephen Strasburg to a long term contract. What is likely to happen to ticket prices? Why? Resigning Strasburg maintains status quo and does not affect demand, so prices should not change 2. Baseball has a rule that a team cannot relocated within a specific distance of an existing team without all owner’s consent. Why do they have such a rule? The presence of another team in the same city reduces each team’s monopoly power since the other team(s) provides a substitute for the team’s product. By limiting competing teams’ ability to locate within a specific distance of an existing team, in effect the league is granting each franchise a local monopoly. 3.
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This note was uploaded on 04/04/2011 for the course ECON 3306 taught by Professor Staff during the Spring '08 term at UT Arlington.

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HW 1 solution-1 - Homework 1 Solution 1. The Washington...

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