1. Go to the website basket-ball reference and find the statistics and salary of your favorite NBA player. Use the equation below for additional wins and assume the value of each additional win is $1.67 million to determine what he is worth to the team (compute the Marginal Revenue Product). Compare the estimated MRP figure with his actual salary to determine whether he is under- or over-paid.
Changeinwins = points + totalrebounds + steals + 0.5 ∗ (blockedshots + assists) - fieldgoalattempts - turnovers - 0.5 ∗ (freethrows + personalfouls)
These should all be per game stats.
2. A friend is arguing that the fact that Urban Meyer gets paid more than any other employee at OSU displays that people have "backwards" preferences. Use a supply and demand graph to show your friend that high salaries could be explained by supply and not demand. Use the term elasticity in your explanation.
3. What are some methods by which team owners are able to restrict player salaries? Using our two team marginal revenue model show how a policy restricting salary (without affecting marginal revenue) affects the portion of revenue going to players.
4. From an economic point of view, should professional tennis tournaments pay the mens and womens bracket an equal amount of prize money? Why or why not? How might one determine the economically fair amount to pay each bracket? Why might the fair value be difficult to determine?
5. Employer sponsored health insurance, retirement packages, and other benefits evolved in part as a way to entice quality employees with non-taxable financial awards. What similar strategies have been employed by NCAA football programs competing for talent?
6. These questions are not covered in the text, but can be answered with a few Google searches:
(a) What is the current salary of Urban Meyer and Chris Holtmann?
(b) How many men's and women's athletic programs (not counting club teams) does OSU currently have? And how many total athletic scholarships are awarded?
(c) What is the current net profit of Ohio State athletics?