questions are on the attached files

Econ 509 Fall 2024

Carlos Zambrana

Sports Economics

Homework #3 (100 Points)

Due Oct 11th, 2024

Instructions:

• You may work together on this problem set. But you must submit your answers individually.

• All answers should be typed. Any mathematical derivations may be written by hand.

1. The Chiefs are favorites against the Jets for their upcoming 10/1 game. A website claims that the Chiefs are +205 on the moneyline, while the Jets are -250. (25 points)

   1. Who is the favorite for this game and how do you know?

   2. Convert these moneyline odds to decimal odds.

   3. Convert them to fractional odds (remember to round down to get integers)

   4. What is the implied winning probability of the favorite?

1. Imagine you and your friends got together and placed the bets shown in the table below for each of these teams in the Big 12. Calculate the fractional odds (round down to get integers), decimal odds and implied winning percentage. Show your calculations for partial credit if you make a mistake. (25 points)

1. Suppose that the marginal propensity to consume in a municipality is 0.75. (25 points)

   1. What is the value of the simple multiplier?

   2. If a new stadium is built that adds $25 million in new consumption expenditures, what is the impact on the economy based on the multiplier?

   3. If residents spend 30 cents of every additional dollar on goods made in other cities or countries, what happens to the multiplier and to the impact on the economy?

1. What is the deadweight loss from a $5 tax on a team’s ticket prices in the following scenarios (25 points):

   1. The demand is perfectly inelastic at and the supply is perfectly elastic and is equal to

   2. The demand is given by and the supply is given by