An expansion team in a professional sports league is considering locating in one of three cities, A, B, or C. The team estimates that its profit in the three cities, excluding the cost of building a stadium, will be: city A = $195 million city B = $200 million city C $210 million The cost of the stadium in any city will be $100 million, but the team expects the winning city to subsidize at least some of this cost. Finally, suppose that each city expects the team to generate the following additional (spillover) economic activity: city A $75 million city B = $60 million city C= $45 million 21. It is efficient for the team to locate in (a) City A. (b) City B. (c) City C. (d) The net return is the same for all three.

An expansion team in a professional sports league is considering locating in one of three cities, A, B, or C. The team estimates that its profit in the three cities, excluding the cost of building a stadium, will be: city A = $195 million city B = $200 million city C $210 million The cost of the stadium in any city will be $100 million, but the team expects the winning city to subsidize at least some of this cost. Finally, suppose that each city expects the team to generate the following additional (spillover) economic activity: city A $75 million city B = $60 million city C= $45 million 21. It is efficient for the team to locate in (a) City A. (b) City B. (c) City C. (d) The net return is the same for all three.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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