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Sport Econ Final

Terms in this set (128)

Who was Lou Thesz and how did he understand sports as entertainment?
Wrestler who said that all sports are essentially sports entertainment. While it doesn't have the same competitiveness as other sports all other sports are turning to becoming sports entertainment in order to keep customers coming back (three point line, Designated hitter)
What is the concept of thinking at the margin?
Considering marginal costs and benefits when evaluating decisions
What is opportunity cost?
the cost of the next best use of your time or money when you choose to do one thing rather than another. If you hate one of the alternatives, don't consider it an opportunity cost
What are the advantages of specialization?
...
Positive vs. Normative Economics
Positive statement- statement of economic fact (can be tested, doesn't have to be true)
Normative- statement of opinion
Comparative vs. Absolute Advantage
Comparative- can produce good at a lower opportunity cost
Absolute- one individual or firm can produce something at a lower actual cost than their trading partner
Which market structure is the most likely to participate in collusion and what is the "incentive to cheat" that occurs when these firms do collude?
Oligopoly- can form cartel to act like a monopoly. The incentive to cheat is that by selling more output they will actually increase revenue but hurt other members of cartel
What does it mean to be a price taker and what does that mean for perfectly competitive firms?
Price taker- all products are virtually the same and therefore can't differentiate there prices, earning "normal profits" in long run
How is the NCAA an incidental cartel?
Power Five conferences granted autonomy by the NCAA, and they act like a cartel, restricting entry to the top level of college football from smaller school and increasing revenue for themselves. If the Power Five conferences left the NCAA, remaining members would produce very little revenue
How does a monopoly price, and how and why does that differ from a perfect competitor?
Monopoly produces less output at a higher price, where MC = MR at the demand level price.
How can a monopolist legally price discriminate? What is 1st, second and third degree price discrimination?
1st degree- charge the customers willingness to pay.
2nd degree- buy in bulk to get discounts (season tickets)
3rd degree- discriminate prices for groups with a more elastic demand (students, seniors)
What is conspicuous consumption?
Demand goes up in perceived price goes up
Why are products elastic?
Many substitutes, not a necessity, higher % of budget, more time able to adjust
Income elasticity of demand equation and how to differentiate between inferior, normal, and luxury goods
(Change in Q / Average Q) / (Change in income/ Average income)
E > 1 = luxury
0 < E <= 1 Normal
E < 0 inferior
Price elasticity of demand and how to tell if it is elastic unit elastic or inelastic. What does this mean?
(Change in Q / Average Q) / Change in P / Average P)

Absolute Value E > 1 = Elastic
Absolute Value E = 1 = Unit Elastic
Absolute Value E < 1 = Inelastic
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