Home / Expert Answers / Economics / problem-2-location-choice-oklahoma-city-currently-has-an-nba-team-the-thun-pa468

(Solved): Problem 2: Location Choice. Oklahoma City currently has an NBA team (the Thun ...



Problem 2: Location Choice. Oklahoma City currently has an NBA team (the Thunder). Demand for Thunder games in Oklahoma City???????

Problem 2: Location Choice. Oklahoma City currently has an NBA team (the Thunder). Demand for Thunder games in Oklahoma City is given by: Seattle does not currently have an NBA team, but they would like to attract the the Thunder. Demand for Thunder games in Seattle is given by: The marginal cost of production in both cities is constant at . 1. Suppose first that no bids are allowed. a) Calculate the profits earned by the Thunder in Oklahoma City. b) Calculate the profits earned by the Thunder in Seattle. c) Will the Thunder move to Seattle? 2. Suppose now that cities can offer bids to attract the team. a) What is the value (consumer surplus) in Oklahoma City? b) What is the value (consumer surplus) in Seattle. c) Will the Thunder move to Seattle? d) How much is the winning bid? e) What is the profit plus bid for the Thunder? f) What is the value minus bid for the winning city? 3. Suppose now that nothing changes except that profits in Seattle are , which may or may not be equal to the value that you calculated above. Cities can still offer bids. a) For what range of will the Thunder move to Seattle? b) Given that the Thunder moves to Seattle, how much is the winning bid? Solve as a function of . Does the winning bid increase or decrease in ? Briefly explain your result.


We have an Answer from Expert

View Expert Answer

Expert Answer


Explanation:Hence the above explained answerNo Bids Alloweda) The Thunder's profit in Oklahoma City is given by:Profit = (P - MC) * Q = (490 - 2Qok -
We have an Answer from Expert

Buy This Answer $5

Place Order

We Provide Services Across The Globe