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coralgrasshopper252Lv1

6 Aug 2019

Are the salaries received by professional sports athletes outrageously high? Should the CEO's of financial institutions receive more monetary compensations than entertainers, since their jobs contribute more to the development of the country? What are some of the factors driving the disparity in wages?

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Few fields of empirical economic research offer virtual unanimity of findings. Yet, independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development (Baade and Dye, 1990; Baim, 1992; Rosentraub, 1994; Baade, 1996; Noll and Zimbalist, 1997; Waldon, 1997; Coates and Humphreys, 1999). These results stand in distinct contrast to the promotional studies that are typically done by consulting firms under the hire of teams or local chambers of commerce supporting facility development. Typically, such promotional studies project future impact and almost inevitably adopt unrealistic assumptions regarding local value-added, new spending, and associated multipliers. They often use a regional input-output model that depends on outdated technical coefficients which are treated as invariant to shifts in supply and demand (Center for Economic and Management Research, 1991; Deloitte & Touche, 1994, 1996; KPMG, 1996; Economic Research Associates, 1996; KPMG, 1998; C.H. Johnson Consulting, 1999). The academic work on the economic impact of sports facilities and teams does not rely upon projection. Rather, it compares the local economic performance of areas with and without stadiums, arenas, and teams, controlling for other variables that affect local economic conditions. Among cross-section studies, for example, Baade (1994) found no significant difference in personal income growth from 1958 to 1987 between 36 metropolitan areas that hosted a team in one of the four premier professional sports leagues and 12 otherwise comparable areas that did not. Looking at 46 cities over the 1990-94 periods, Waldon (1997) found that higher high school graduation rates and more spending on police are what encouraged economic growth, while the presence of a major league sports team actually put a drag on the local economy. Both Baade and Waldon controlled for other factors affecting underlying trends in economic growth. Time-series studies confirm the cross-section results. Baade and Sanderson (1997), for example, found no perceptible net increase in economic activity or employment in 10 cities that acquired new sports teams between 1958 and 1993 after factoring out other economic trends affecting each area. They did observe a reordering of leisure expenditures within the cities that acquired new teams, but there was no evidence that the new sports teams brought output or employment growth to the local area. A more recent study, by Coates and Humphreys (1999), finds that new stadiums and sports teams actually reduce per capita income in the host communities. This result is consistent with a higher (negative) multiplier for the displaced leisure expenditures than for the expenditures on a new team or in a new stadium because the latter likely involve substantial leakages from the local economy to the remote residential locations of some players and team owners. The conclusion that sports teams and facilities do not stimulate economic growth is surprising to many people. With live telecasting of games, daily coverage on television news and in the sports sections of newspapers, professional sports play a huge role in U.S. culture. Yet sports teams are small businesses. Yearly average team revenues in 1999 are around $55 million in the NHL, $75 million in the NBA, $85 million in MLB and $100 million in the NFL. For a medium-sized city like St. Louis, the baseball team accounts for less than 0.3 percent of local economic activity; for a large city like New York, a baseball team contributes less than 0.03 percent of economic output. Sports teams typically employ between 70 and 130 people in their front offices. Beyond this, they hire approximately 1000-1500 day-of-game personnel who work in unskilled, low wage, temporary, part-time jobs. An NFL team is assured of playing 10 home games a year (including preseason games). At four hours of work per game, an NFL team provides day-of-game employment for the equivalent of 20 to 30 full-time, year-round jobs. As we shall see, however, it is problematic to attribute even these jobs to the sports team. Of course, the controversy about the economic impact of professional sports teams on their local economy is not just about the teams themselves, but also about how specific local restaurants, hotels, and other businesses might be affected. However, even if one assumes, optimistically, that on average people spend as much outside the sports facility as they do inside, the economic impact of sports teams in proportion to a typical metropolitan economy is diminutive. Apart from their relatively small size, there are three key reasons why professional sports teams do not promote economic development: the substitution effect; extensive leakages; and the likely negative effect on local government budgets. The analysis of these three effects that follows describes the situation when a team or a facility is new to an area. Of course, in many cases, the choice is whether or not to build a facility for a team that is already there. In such a case the incremental consumer surplus, external benefits or new spending will be considerably less. From the city's perspective, however, the opportunity cost of not building a facility with public funds may be perceived to be the loss of the team and all of its attendant benefits.

-------------------------------------------------Question

1. . The authors discuss the role of leakages in determining the impact of sports teams on the local economy. What are they talking about? Be specific so as to convince me that you read the article carefully

raspberryarmadillo231

More than 1.5 million vehicles collide with deer annually, killing hundreds of people and causing over $1 billion in vehicle damage. Some states, such as Michigan, attributed one in seven vehicle accidents to deer. Additional evidence indicates that many deer-related accidents go unreported.

The problem escalates in the fall of each year during deer mating season as more deer are on the move. While deer whistles and other vehicle warning systems appear ineffective in dealing with the problem, clearing brush in the road ditches to make deer more visible appears to help. Deer warning signs also appear to make drivers more vigilant and lower deer-vehicle collisions. What's the best advice? Drivers should be cautious when in deer country and when you see one deer there are likely others around.

Driving an insured vehicle in deer country could create a moral hazard problem. Since the insured knows the company will cover losses, it might make people less vigilant. While it may not be the case with automobile insurance, we do see people take more risks if they know they will not bear the entire burden of the possible negative outcome of their action.

1. What is the purpose of automobile insurance?

2. How does insurance encourage risky behavior?

3. If insurance companies did not cover deer/vehicle collisions or had a very high deductible, what should we observe?

mauvedolphin78

1. Countries tend to be classified as more or less developed based on

a. the literacy rate.

b. the poverty rate.

c. the level of income per capita.

d. the types of goods they produce.

2. A subsistence economy is

a. a very low income economy.

b. an economy in which people make what they consume.

c. an economy in which people receive food for pay.

d. all of the above.

3. Development economics is the study of the

a. alleviation of absolute poverty.

b. transformation of institutions.

c. allocation of resources in developing countries.

d. all of the above.

4. Which of the following is not an important objective of development?

a. increases in per capita income

b. the expansion of available choices

c. increases in individual and national self-esteem

d. all of the above are important objectives of development

5. The core values of development include

a. increasing income per person.

b. reducing the inequality of income.

c. the ability to meet basic needs.

d. all of the above.

6. An example of an upper-middle income country is

a. India.

b. Brazil.

c. Indonesia.

d. Nigeria.

7. A newly industrialized country is

a. the same as a high-income country.

b. any country that has experienced sustained growth in industry.

c. a special classification given to some upper-middle income countries that have
achieved relatively advanced manufacturing sectors.

d. any country that has moved out of lower income status.

8. Which of the following is not an upper-middle income country?

a. Brazil

b. South Africa

c. Pakistan

d. Argentina

9. One of the components of the human development index is

a. the percentage of the population who are high school graduates.

b. the average daily intake of protein.

c. life expectancy at birth.

d. the number of doctors per hundred people in the population.

10. The number of units of developing country currency required to purchase a basket of goods and services in a developing country that costs one dollar in the U.S. is given by

a. GNI price deflator.

b. Human Development Index ranking.

c. purchasing power parity.

d. the exchange rate.

Part B: Quantitative Analysis (Show all your work with graphical analysis).

Problem # 1: