Sport Econ

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nn228830

Economics

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answer final exam questions which are attached. (Skip research quastion in the last page). 11 queastions, pick three in the first part, one in the second one, and two in the third part

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Part 2: JAVI Answer one of the following questions. (25 points each) 5. Economists have questioned whether reverse order drafts, free agency, and salary caps affect the allocation of players among teams in a way that leads to increased competitive balance. Choose a league that uses one or more of these tools. Describe the steps the league takes to maintain competitive balance. How effective or ineffective are these efforts? Explain your answer. 6. Economists generally assume that owners of professional sports teams must choose to either maximize wins or maximize profits. Underlying this assumption is the expectation that an owner who focuses on maximizing wins is at a point where marginal costs (the additional investment the team needs to win more games) is greater than marginal revenues (or benefits from another win). Defend this assumption by explaining (1) why (after a certain point) it becomes increasingly costly to continue to improve a team's winning percentage and (2) why (after a certain point) additional wins contribute less to total revenue. (Producing a (correct) graph along with your explanation is worth 5 of the 25 points.) 7. Although I totally dropped the ball on the fantasy football league during the second half of the semester, I do have a question. As we finished the first (and only) season at midterm, one team owner asked if we couldn't change the rules and increase the fantasy rosters by one player each week. I assume this team had stockpiled some of the best players and was now forced to leave high-scoring talent on the bench. Tie this question/observation from our fantasy league to the belief by many economists that the law of diminishing returns provides a natural tendency toward competitive balance. Part 3: Answer two of the following questions. 8. Suppose as an owner, you could leave the highly competitive league (in terms of closeness of contests) and enter a league that assured your team would never lose again. Would you want to do so? Why or why not? 9. Using supply and demand explain how each of the following would affect the salaries of professional basketball players in the NBA. a. The Great Recession of 2008-2009 b. The Chinese government creates a new professional basketball league to rival the NBA c. A change in tax laws reduces the profitability of owning a sports franchise 10. Major League Soccer, the U.S. professional men's soccer league, has been gaining fans, increasing revenues, and adding more teams. Contributing to the success of the MLS has been a recent initiative to bring European players to the U.S. to play in the league (even though these European players are past their prime). Meanwhile, the U.S. men's national soccer team has struggled. Someone could argue that the European players are taking positions that should be given to Americans-especially if we want to improve the quality of our national team. Evaluate this argument from the perspective of the financial health of MLS, the role of discrimination, and the continuing effort to field a higher quality national team. 11. Use our discussion of the Prisoner's Dilemma to explain why many individual English Premier League teams have many foreign players on their rosters even when, as a group, the Premier League teams agree that they want to limit the number of foreign- born players. Research Question (10 points) We have discussed a wide range of topics this semester as applied to the business of sports, from sports leagues and franchises, including their sources of revenues and profits, to competitive balance, labor markets for athletes, discrimination, the economics of intercollegiate sports, and mega-events. We've touched on public financing of stadiums and the use of performance enhancing drugs by athletes. Place your research into one (or more) of these topics. What would you share from the results of your research with next year's class? FINAL EXAM FALL 2018 ECO 305-A This exam is worth 135 points. There is also a 10-point final question about your research paper. Part 1: Wednesday's (Dec. 12) Wall Street Journal included an article entitled "Missing from Bowls: Top Players." Several elite college football players are skipping their teams' bowl games, fearing the risk of injury. As one person asked, "Is it really worth risking millions of dollars for an unpaid appearance in the Camping World Bowl?" Athletes are skipping even some of the more prestigious bowl games. The January 1 Fiesta Bowl between Louisiana State University and Central Florida will be missing LSU cornerback Greedy Williams, one of the best players in the country at his position. There is a lot of "business and economics” to unpack in this news story. Answer three of the following questions. (20 points each) 1. The NCAA limits the compensation provided to college athletes to scholarships, room, board, and (more recently) some spending money. College athletes receive no additional compensation for playing bowl games while football coaches and athletic directors receive bonuses. Describe the cost/benefit analysis an athlete might undertake in deciding whether to participate in a (non-playoff) bowl game. What considerations lead some athletes to participate while others choose not to play? 2. Coaches clearly aren't happy when their star players choose to sit out a bowl game. Coaches who win high profile bowl games often receive added bonuses and they have an easier time recruiting top high school prospects. Why, then, do coaches not make a bigger fuss about players who choose not to participate? What costs and benefits are coaches considering when they accept players' decisions to forego the bowl game in which the team will play? 3. Athletes' increasing reluctance to participate in bowl games also has an impact on the organizations that host and sponsor bowl games. Explain the potential financial ramifications for the bowl games themselves. 4. Most of the football players who choose to forego the bowl games in which their teams participate plan to leave college and participate in the NFL draft in the spring. While economists often argue that investment in a college education provides a long-term benefit to those who complete their degrees, how might these athletes' failing to graduate from college prove to be an optimal investment in their human capital?
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Sport Economics
Name of Student
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Date

Part 1
Question 1
The cost/benefit analysis an athlete might undertake in deciding whether to participate in a (nonplayoff) bowl game exist since that there must be a common unit of measurement. In order to reach a
conclusion as to the desirability of whether to participate in a (non-playoff) bowl game, positive and
negative, must be expressed in terms of a common unit; that is, there must be a "bottom line." The
most convenient common unit is money. This means that all benefits and costs of a project should be
measured in terms of their equivalent money value. A program may provide benefits which are not
directly expressed in terms of dollars but there is some amount of money the recipients of the benefits
would consider just as good as the participant’s benefits. The value of that benefit to an athlete
recipient is the minimum amount of money that that recipient would take instead of the medical care in
case of injury. This could be less than the market value of the medical care provided.
The considerations that lead some athletes to participate while others chose not to play can be analyzed
through the principle that valuations should represent consumers or producers and valuations as
revealed by their act...


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