The owners of sports franchises often complain that free-agency (open bidding for player services) threatens their profitability and thus their long-run viability. Given your knowledge of perfect competition, which of the following is correct?
A) Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players equal zero.
B) Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players is negative.
C) Team owners are lying, as free-agent salaries are still much too low.
D) Team owners are telling the truth, as free-agent salaries are much too high.
A
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The following data relate to the supply schedule of a product.PriceQuantity Supplied$51001020015250203002535030500Using the regular percentage change formula, what is the price elasticity of supply when price decreases from $10 to $5?
A. perfectly elastic B. unit elastic C. elastic D. inelastic
Suppose Bright Orange is large firm that grows and harvests oranges. Each orange yields 2 ounces of orange juice and exactly one orange peel. The market for oranges is perfectly competitive and Bright Orange sells the orange juice to juice distributors and the orange peels to fragrance companies. At a quantity of 500,000 oranges, juice distributors will pay $0.05 per ounce of orange juice and
fragrance companies will pay $0.10 per orange peel. At the quantity of 500,000 oranges, what is the market equilibrium price of an orange? A) $0.05 B) $0.20 C) $0.15 D) $0.10
The circular flow diagram divides the economy into:
a. Producer sector and consumer sector. b. Real sector and nominal sector. c. Domestic sector and foreign sector. d. Operating sector and non-operating sector. e. Winners and losers.
Taxes drive a wedge into the market by raising the price that sellers receive and lowering the price that buyers pay
a. True b. False Indicate whether the statement is true or false