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Unformatted text preview: Sports Economics Homework #2 Due Wednesday, May 26th Please write your answers on a separate sheet. For full credit , it should be obvious from your work how you arrived at your answers. 1) Define marginal revenue product. (MRP) a) Find a player who has changed teams. Cite the player, the old team and the new team. Assuming the player’s level of play is the same, did their MRP rise, fall or stay the same? Defend your answer. b) Use MRP to explain why Tom Brady’s wife, Gisele Bundchen, makes over twice his $18 million salary. 2) Explain the fallacies of the following: a) "Free agency will ruin competitive balance in baseball because all the rich teams will buy all the good players." b) “Increasing revenue sharing will increase competitive balance because the big market teams will transfer revenues to small market teams, who will buy more talent and increase their win percent.” 3) Imagine a league is comprised of a larger (L) and smaller revenue (S) team. W L and W S are their respective winning percents, and their marginal revenue functions are (values in millions of dollars):...
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This note was uploaded on 05/31/2011 for the course ECON 330 taught by Professor Amberbrown during the Spring '11 term at Grand Valley State.
- Spring '11