Study_GuideEconOfSports

Study_GuideEconOfSports - I The Franchise 1 Who is the...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
I. The Franchise 1) Who is the franchise? i. The owners as individuals ii. Purpose to maximize profit for the team 2) Revenue i. Ticket Sales 1. Luxury seats keep money 2. Ticket pricing strategies (bundling, price discrimination) Ticket prices in monopolist market 3. Examples of how franchises effect the demand curve 4. Demand = P = 100-2Q Capacity = 15 5. Algebraically: P* = 70 a. Q* = 15 b. Q* = 25 c. P* = 50 d. TR = PQ = (100-2Q)(Q) = 100Q – 2Q 2 e. MR = dTR = 100-4Q f. MR = MC which is 0 until they hit Q* 6. Price discrimination – used to maximize profits a. 1 st degree price discrimination i. Who wants to go for $5? $2? $1? – can only do once. Charge everyone their marginal willingness to pay. b. 2 nd degree price discrimination i. Charge different prices based on quantity of the good. ii. Group Rates – Season Tickets (if you buy 20 tickets then you will pay less) NOT bundling because bundling would be combining different goods. c. 3 rd degree price discrimination
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
i. Charge different prices for different parts of the market – Senior Citizen Discount, Student Discount, Ladies Identify, Illegal ways(can’t discriminate base of race and gender) d. Bundling – packaging different goods together i. Disney world – Airfare, park, and hotel together; Free hot dog with tickets 7. Promotions used to increase profits a. Add bobble head nights, fireworks night, increases demand, Jordan comeback 8. Winning increase demand which increases revenue 9. Star athlete - increases demand, helps road attendance more 10. Lower P*? Yes to sellout or to prevent blackout but only if there is enough gains elsewhere 11. How to determine price and quantity in different settings (i.e. competitive
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern