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In: Economics

3 Subsidies for Stadiums Suppose Quebec is a city without a NHL team but they want...

3 Subsidies for Stadiums Suppose Quebec is a city without a NHL team but they want one. Demand for a hockey game in Quebec is given by: P(Qq) = 90 − 2Qq Where Qq is in thousands of fans. Phoenix currently has a team (Coyotes), but is seeking subsidies to build a new stadium. Demand for hockey in Phoenix is: P(Qp) = 70 − Qp where Qp is in thousands of fans. The marginal cost of a ticket in both cities MC = 10. For all numerical answers, you can answer in thousands of dollars or dollars.

3.2 Subsidies Now assume subsidies are allowed.

b What is the highest subsidy that the city of Phoenix would offer the owners to stay?

c What is the lowest subsidy the owners would accept to stay?

d Would the team move to Quebec?

e How much is the winning subsidy?

f What is per game profit+subsidy for the team?

g What is per game consumer surplus

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
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