6. Marginal productivity theory provides an economic explanation for a. why the

Question

6.    Marginal productivity theory provides an economic explanation for
    a.    why the marginal cost of employing NBA players is 0
    b.    why the average player salary is higher in the NBA than in the NFL
    c.    why the average player salary is higher in the NFL than in the NBA
    d.    why NFL clubs operate as profit-maximizers and NBA clubs do not


7.    A public good is defined as a good
    a.    that has a zero price
    b.    that is supplied by government
    c.    that has non-exclusive benefits
    d.    whose market demand increases over time


8.    Profit-maximization in the employment of superstar players implies that a team will employ them such that
    a.    the marginal revenue product of superstars equals the marginal cost of superstars
    b.    ticket demand is unit elastic
    c.    the marginal cost of superstars is reduced to zero
    d.    the marginal product of superstars equals the average ticket price


9.    League-level marketing has the characteristics of a public good in that
    a.    only individual member franchises benefit
    b.    it helps prevent the admission of new franchises into the league
    c.    it prevents individual franchises from engaging in local-level marketing
    d.    one individual member franchise benefits without reducing the benefit of another franchise


10.    The substitution effect describes how
    a.    a lower wage offer encourages individuals to work more
    b.    a higher wage implies a lower opportunity cost of leisure
    c.    a higher wage offer encourages individuals to work less
    d.    a higher wage offer encourages individuals to work more

Explanation / Answer

6. Option d. Marginal productivity deals with returns or profit generated by each player than a average number
7. Option c. The benefits are not restricted to the person or group
8. Option a
9. Option d
10. Option d. Leisure and work are substitutes which are explained by substitution effect

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