# Econ 2P42 Assignment #2Instruc4ons:Hand in your type-wri1en printed copy in class on March 22, 2023. Electronic copies are not accepted. You may draw graphs by hand. You may write...

Econ 2P42 Assignment #2
Instruc4ons:

Hand in your type-wri1en printed copy in class on March 22, 2023. Electronic copies are not accepted. You may draw graphs by hand. You may write equaBons/formulae by hand.

This assignment has 4 quesBons and is worth a total of 50 marks. This assignment has a weight of 20% in your final mark.

1.

(15 marks in total)

Use data from the following website to answer this quesBon:

h1ps://www.espn.com/nhl/standings

. Note that this landing page takes you to data for the current season, but you can look up data for previous seasons.
a)

(6 marks)

Calculate the within-season variaBon in the NHL using data from 2018-2019. This was the last regular season pre-COVID in which 82 games were played. Now, calculate the within-season variaBon using data from 2021-2022. This was the first regular 82-game season post-COVID. What has happened to the compeBBve balance (as measured by within-season variaBon) for the NHL over this Bme period? (Your answer must include the formula for calculaBng within-season variaBon.)
b)

(2 marks)

Now, calculate the within-season variaBon using data from 2020-2021 season. This was during COVID and each team only played 56 regular games.
c)

(3 marks)

Write down the formula that is used to adjust a within-season variaBon measure for the actual number of games played. Calculate this value for the 2020-21 season and use it to adjust your within-season variaBon. (Show all your work.)
d)

(4 marks)

Compare within-season variaBon across the three Bme periods: 2018-2019, 2020- 2021, and 2021-2022 esBmates. (Hint: before you do this, you will also need to adjust the pre and post COVID periods for number of games played). What does your data suggest has happened to compeBBve balance over that period?

2.

(15 marks in total)

Assume that a professional sports team is a profit-maximizing (but not a price-discriminaBng) monopolist. Assume the inverse demand for Bckets is given by P = 12 – 0.75Q.
Assume that the marginal cost of selling another Bcket is constant and equal to three (\$3) per Bcket sold and fixed costs \$19. Assume there are no capacity constraints.

a)

(3 marks)

Draw a completely labelled graph of the situaBon described above.
b)

(4 marks)

Calculate the opBmal price, number of Bckets sold, consumer surplus, and team profits.
c)

(2 mark)

Calculate the amount of deadweight loss to society from not having perfect compeBBon in Bckets.
d)

(2 marks)

Now, assume the team can idenBfy the maximum willingness to pay for each unique consumer (that is, the team is a perfect price discriminaBng monopoly). How many Bckets will it sell and at what price?
e)

(4 marks)

For the price discriminaBng monopoly, illustrate in your graph and calculate the consumer surplus and the deadweight loss.

3.

(10 marks in total)

Assume that a professional sports team maximizes profits but realizes that there are different demands for games depending on the day of the week. Suppose the inverse demand is given by P=167-2Q for Sundays and it is P=120-1.5Q for Tuesdays. Furthermore, assume that the marginal cost of selling a Bcket is constant per Bcket and equal to 3. Assume there a no capacity constraints.

a)

(6 marks)

Draw a single graph as close to scale as you can and clearly label all relevant lines and axes.
b)

(2 marks)

What discount will the team give to Tuesday Bcket purchasers to maximize their profits?

c)

(2 marks)

What will a1endance be on Tuesdays versus Sundays?

4.

(10 marks in total, 2 for each concept/example)

Define the following concepts and provide a real-world professional sports example.
a) rent-seeking
b) luxury tax

c) salary cap
d) strategic pricing e) bundling

Mar 09, 2023
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