A major sports league, comprised of 200 players, reported a…

A major sports league, comprised of 200 players, reported a loss of $519 million in 2021.  The sports league has yearly fixed costs of $700 million. The league is considering shutting down for the 2022 season and selling the rights to their players to a rival league for the entire 2022 season. What is the lowest price the sports league would be willing to accept (indifferent) for the rights to all of their players, which would then lead to a shut-down for the 2022 season? Assume this is a short-run decision and all relevant numbers are presented in the problem.

FlyExclusive is a company that offers memberships for access…

FlyExclusive is a company that offers memberships for access to chartered private jets. They are trying to decide the optimal price for their membership fee and are considering using a two-part tariff. They estimate consumer demand to be: Q = 200 – 0.1P (or P = 2000 – 10Q), where Q is the number of charted jet flights per year and P is the price per flight. If the marginal cost of serving each customer is $100 per flight, what is the optimal two-part tariff that FlyExclusive should charge?

During the height of the pandemic, many airlines substantial…

During the height of the pandemic, many airlines substantially cut back on the number of flights offered each day. Now, as demand has increased as people begin travelling again, Delta and United are considering adding flights to their current daily schedules. The following payoff matrix describes the payoffs associated with adding flights or maintaining their current number of flights, where payoffs are listed in millions of dollars. Suppose that, in an effort to further incentivize United, the U.S. government decides to offer United an $8 million subsidy if they decide to increase their # of flights. This subsidy will be paid to United regardless of Delta’s actions. Based on this subsidy, what is the Nash equilibrium in this subsidized game?  

Betty White’s house in Carmel, CA is being auctioned off in…

Betty White’s house in Carmel, CA is being auctioned off in a second-price sealed bid auction. There are 5 mega-fans taking part in the auction. They each have a private value listed below.     All bidders, except Bidder #4, have taken Business Microeconomics and understand auction theory. As such, these bidders will submit bids using their optimal strategies, while Bidder #4 submits a bid of $12.5 million. Which bidder will win the auction and what will be the amount paid?

FlyExclusive is a company that offers memberships for access…

FlyExclusive is a company that offers memberships for access to chartered private jets. They are trying to decide the optimal price for their membership fee and are considering using a two-part tariff. They estimate consumer demand to be: Q = 100 – 0.1P (or P = 1000 – 10Q), where Q is the number of charted jet flights per year and P is the price per flight. If the marginal cost of serving each customer is $100 per flight, what is the optimal two-part tariff that FlyExclusive should charge?