Question 1

The sport where labor restrictions on player movement are the hardest to enforce is

Accepted Answer

A) NBA basketball. 
B) NFL football. 
C) Major League Baseball. 
D) European soccer. 
A) NBA basketball. 
B) NFL football. 
C) Major League Baseball. 
D) European soccer. D

Question 2

Suppose your community is considering using public money to build a new sports stadium for the team that is already in the community and unlikely to ever leave. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say

Accepted Answer

A) the jobs created in the area will make it worth the investment. 
B) there will be no new jobs created. 
C) there will be no new jobs created in net because there will be about the same number of restaurant jobs lost near the old stadium as gained near the new one. 
D) It may be a short-term cost, but in the long term it will be worthwhile. 
A) the jobs created in the area will make it worth the investment. 
B) there will be no new jobs created. 
C) there will be no new jobs created in net because there will be about the same number of restaurant jobs lost near the old stadium as gained near the new one. 
D) It may be a short-term cost, but in the long term it will be worthwhile. C

Question 3

The era of free agency dawned in major sports in

Accepted Answer

A) 1946. 
B) 1977. 
C) 1985. 
D) 1998. 
A) 1946. 
B) 1977. 
C) 1985. 
D) 1998. B

Question 4

European soccer doesn't have issues with a reserve clause because

Accepted Answer

A) there are leagues in other countries where players can always play. 
B) soccer pays so little. 
C) soccer pays so much. 
D) soccer teams are owned by the players. 
A) there are leagues in other countries where players can always play. 
B) soccer pays so little. 
C) soccer pays so much. 
D) soccer teams are owned by the players.

Question 5

The use of public money to attract sports is

Accepted Answer

A) limited to football. 
B) overwhelmingly in baseball. 
C) expanding to include spring training baseball sites. 
D) now causing the Master's golf tournament to move to Las Vegas. 
A) limited to football. 
B) overwhelmingly in baseball. 
C) expanding to include spring training baseball sites. 
D) now causing the Master's golf tournament to move to Las Vegas.

Question 6

Suppose your community is considering using public money to build a new sports stadium for a new team that will only come to the community if it is built for them. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say

Accepted Answer

A) the economic activity created in the area will make it worth the investment. 
B) there will be no new economic activity created. 
C) there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else. 
D) it may be a short-term cost, but in the long term it will be worthwhile. 
A) the economic activity created in the area will make it worth the investment. 
B) there will be no new economic activity created. 
C) there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else. 
D) it may be a short-term cost, but in the long term it will be worthwhile.

Question 7

Though the owners of NFL and MLB teams may be able to show that they lose money each year, economists who study the subject insist that they

Accepted Answer

A) lose the same amount as they do in their other businesses. 
B) still make money, because they can sell their team for much more than they paid for it. 
C) lose money only if they lose games. 
D) are using phony accounting tricks to come up with those losses and that every franchise makes money. 
A) lose the same amount as they do in their other businesses. 
B) still make money, because they can sell their team for much more than they paid for it. 
C) lose money only if they lose games. 
D) are using phony accounting tricks to come up with those losses and that every franchise makes money.

Question 8

Which of the following teams is not in its original franchise?

Accepted Answer

A) The Arizona Cardinals (football). 
B) The Green Bay Packers (football). 
C) The Pittsburgh Steelers (football). 
D) The Kansas City Royals (baseball). 
A) The Arizona Cardinals (football). 
B) The Green Bay Packers (football). 
C) The Pittsburgh Steelers (football). 
D) The Kansas City Royals (baseball).

Question 9

In NASCAR, the IRL and Formula 1 racing, the common key feature of the ownership structure is that they are all governed by

Accepted Answer

A) family owned monopolies. 
B) corporate governance structures that requires that all decisions be made by a Board of Directors. 
C) cooperative arrangements of drivers and team owners. 
D) perfect competition. 
A) family owned monopolies. 
B) corporate governance structures that requires that all decisions be made by a Board of Directors. 
C) cooperative arrangements of drivers and team owners. 
D) perfect competition.

Question 10

Tampa-St. Petersburg built new facilities to attract a sports franchise, but got a team only after waiting

Accepted Answer

A) two years. 
B) four years. 
C) five years. 
D) ten years. 
A) two years. 
B) four years. 
C) five years. 
D) ten years.

Question 11

The extra revenue to a team associated with a player is called the player's

Accepted Answer

A) reservation wage. 
B) marginal revenue product. 
C) average compensation. 
D) minimum wage. 
A) reservation wage. 
B) marginal revenue product. 
C) average compensation. 
D) minimum wage.

Question 12

A free agent is a player who

Accepted Answer

A) is bound to the team he was under contract with the previous year. 
B) can sell his services to the highest bidder. 
C) is eligible to be drafted. 
D) must play for free. 
A) is bound to the team he was under contract with the previous year. 
B) can sell his services to the highest bidder. 
C) is eligible to be drafted. 
D) must play for free.

Question 13

If NASCAR makes a business decision in favor of one track rather than another, based upon the fact that the track it chooses is owned by the same family who owns NASCAR, rather than the overall profitability of the chosen track, economists will insist that

Accepted Answer

A) this is simply a consequence of the family's monopoly power. 
B) competition will quickly lead to NASCAR's demise. 
C) this is what happens when there is significant economic competition in racing. 
D) monopoly does not really govern auto racing. 
A) this is simply a consequence of the family's monopoly power. 
B) competition will quickly lead to NASCAR's demise. 
C) this is what happens when there is significant economic competition in racing. 
D) monopoly does not really govern auto racing.

Question 14

Salary caps were instituted to

Accepted Answer

A) reduce overall player costs to teams. 
B) make it so that one team could not sign all of the good talent. 
C) keep player salaries from becoming uneven. 
D) reduce overall player costs to teams and make it so that one team could not sign all of the good talent. 
A) reduce overall player costs to teams. 
B) make it so that one team could not sign all of the good talent. 
C) keep player salaries from becoming uneven. 
D) reduce overall player costs to teams and make it so that one team could not sign all of the good talent.

Question 15

During the labor dispute of 2011, the owners contended that the NFL players were

Accepted Answer

A) garnering an unfair portion or league revenues because the 60% of everything above $1 billion had grown from 40% of revenues to more than half of revenues. 
B) intentionally playing poorly to weaken the value of the league. 
C) pretending to be hurt when they really were not. 
D) using performance enhancing drugs. 
A) garnering an unfair portion or league revenues because the 60% of everything above $1 billion had grown from 40% of revenues to more than half of revenues. 
B) intentionally playing poorly to weaken the value of the league. 
C) pretending to be hurt when they really were not. 
D) using performance enhancing drugs.

Question 16

The local substitution argument against using public money to attract baseball spring training sites is

Accepted Answer

A) less valid as the argument against regular stadiums because most of the fans at a spring training game are tourists who would not be in that city otherwise. 
B) just as valid as the argument against regular stadiums. 
C) even more valid than the argument against regular stadiums. 
D) completely invalid because no one at a spring training game is from the local community. 
A) less valid as the argument against regular stadiums because most of the fans at a spring training game are tourists who would not be in that city otherwise. 
B) just as valid as the argument against regular stadiums. 
C) even more valid than the argument against regular stadiums. 
D) completely invalid because no one at a spring training game is from the local community.

Question 17

Suppose your community is considering using public money to build a new sports stadium for the team that is already in the community but is likely to leave without a new stadium. Suppose you are watching a news broadcast in which the supporters are saying that it will enhance economic activity because of the increase in restaurant activity that will occur around the new stadium. Now suppose you hear that an independent economist is going to appear during the next segment. It is likely she will say

Accepted Answer

A) the economic activity created in the area will make it worth the investment. 
B) there will be no new economic activity created. 
C) there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else. 
D) it may be a short-term cost, but in the long term it will be worthwhile. 
A) the economic activity created in the area will make it worth the investment. 
B) there will be no new economic activity created. 
C) there will be no new economic activity created in net because the same amount of money will be spent in the city whether or not there is a team. It will simply substitute from the game to something else. 
D) it may be a short-term cost, but in the long term it will be worthwhile.

Question 18

The annual rate of return that is generated when you compare the purchase price and the current market value of teams suggests that _____ generate a good rate of return.

Accepted Answer

A) only big name teams 
B) only NFL teams 
C) only MLB teams 
D) most franchises 
A) only big name teams 
B) only NFL teams 
C) only MLB teams 
D) most franchises

Question 19

Existing teams have the bargaining power to induce cities to build stadiums for them because of the

Accepted Answer

A) difficulty of obtaining expansion franchises. 
B) ease of obtaining expansion franchises. 
C) fact that they have won national championships. 
D) fact that land in some urban areas is still relatively cheap. 
A) difficulty of obtaining expansion franchises. 
B) ease of obtaining expansion franchises. 
C) fact that they have won national championships. 
D) fact that land in some urban areas is still relatively cheap.

Question 20

In general, a city using taxpayer money to build a new sports stadium will realize

Accepted Answer

A) a large positive return on its investment. 
B) a substantial negative return on its investment. 
C) no significant positive return on its investment. 
D) an irreversible expansion of organized criminal activity. 
A) a large positive return on its investment. 
B) a substantial negative return on its investment. 
C) no significant positive return on its investment. 
D) an irreversible expansion of organized criminal activity.

Exam 43: If We Build It, Will They Come and Other Sports Questions

The sport where labor restrictions on player movement are the hardest to enforce is

The era of free agency dawned in major sports in

European soccer doesn't have issues with a reserve clause because

The use of public money to attract sports is

Though the owners of NFL and MLB teams may be able to show that they lose money each year, economists who study the subject insist that they

Which of the following teams is not in its original franchise?

In NASCAR, the IRL and Formula 1 racing, the common key feature of the ownership structure is that they are all governed by

Tampa-St. Petersburg built new facilities to attract a sports franchise, but got a team only after waiting

The extra revenue to a team associated with a player is called the player's

A free agent is a player who

If NASCAR makes a business decision in favor of one track rather than another, based upon the fact that the track it chooses is owned by the same family who owns NASCAR, rather than the overall profitability of the chosen track, economists will insist that

Salary caps were instituted to

During the labor dispute of 2011, the owners contended that the NFL players were

The local substitution argument against using public money to attract baseball spring training sites is

The annual rate of return that is generated when you compare the purchase price and the current market value of teams suggests that _____ generate a good rate of return.

Existing teams have the bargaining power to induce cities to build stadiums for them because of the

In general, a city using taxpayer money to build a new sports stadium will realize

Economics: the Study of Opportunity Cost

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Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

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