Economics of Enterprise Answers

How can the San Diego Padres, one of the weakest teams in the National League from a wins-losses perspective, be one of the most profitable?

Use the law of diminishing returns to explain why pro golfer Rory McIlroy should not spend all of his practice time working on his putting.

Use supply and demand to show why teams that win championships typically raise their ticket prices the next season.

Is the following statement true or false? Explain your reasoning. “I am attending college on a full athletic scholarship, so the opportunity cost of attending college is zero for me.”

Use an appropriate economic theory to explain why Kobe Bryant might employ someone to answer his fan mail even if he can read the letters and type the responses more quickly than the person he employs?

Kinkead Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm’s value of operations, in millions?

Use the theory of clubs to explain why the Big 10 Conference is expanding.

Suppose Clayton Kershaw is the best pitcher in baseball. To keep him from moving to another team the Dodgers offer him a huge raise in salary. They do not, however, raise ticket prices.

a) One friend says, "The Dodgers are idiots. They should raise prices to cover their higher costs." What do you tell her?

b) Another friend says, "The Dodgers are idiots. They should raise their prices in response to higher demand." What do you say to him?

Why are stadiums largely built on the edge of town or in the suburbs rather than in the center of town? Hint: Refer to the hoteling model.

Why have far fewer basketball and hockey teams sought single-use stadiums than have baseball and football teams?