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Assignment 1

(Due Monday Oct 21st, 11:45 AM in class)

Economics 2182A-570

Economics of Sports

Fall 2024

You may work in group of two to four students. Everything must be neatly typed up. Show all work for full marks.

1. The demand function for Western Mustang’s football tickets is given by

Q = 15000 – 300P

(a)  Express the total revenue as a function of Q

(b)  Express the marginal revenue as a function of Q

(c)  What Q* maximizes the total revenue?

Suppose that the total cost function is given by

TC = 10Q

(d)  What Q* maximizes the profit? What price, P*, should you charge?

(e)  If the stadium capacity is 8000, how many tickets would you want to sell?

(f)   If the stadium capacity is 5000, how many tickets would you want to sell?

2. Use the NBA.xlsx file in OWL. You may use any statistical software, but I recommend using Gretl.

(a) Run an OLS regression of Salary on constant and PPG. (command: ols Salary const PPG) Attach the result table. What is the coefficient on PPG? Is it statistically significant? Why? What is the interpretation of the coefficient? What is the R2?

(b) Run an OLS regression of Salary on constant, PPG, RPG, and APG. What is the coefficient on PPG? Is it statistically significant? What is the interpretation of the coefficient? How did R2  change? What does it mean?

(c) Run an OLS regression of Salary on constant, PPG, RPG, APG, SPG, TOPG, and Age. What is the coefficient on Age? Is it statistically significant? What is the interpretation of the coefficient? What is your opinion on the interpretation? Do older players get paid more?

(d) Run an OLS regression of Salary on constant, PPG, RPG, APG, SPG, TOPG, Age, and Exp. What is the coefficient on Age? Is it statistically significant? What is the coefficient on Exp? Is it statistically significant? Why is the result different from the answer in (c)?

(e) Run an OLS regression of Salary on constant, PPG, RPG, APG, SPG, TOPG, Exp, and Height. What is the coefficient on Height? Is it statistically significant? What is the interpretation?

(f) Run an OLS regression of Salary on constant, PPG, RPG, APG, SPG, TOPG, Exp, Height, PG, SG, SF, PF. What happens to the significance of the coefficient on Height? If it changes, why?

(g) Run an OLS regression of Salary on constant, PPG, RPG, APG, SPG, TOPG, Exp, PG, SG, PF, and C. What is the coefficient on PG? Is it significant? What is the interpretation?

(h) Run an OLS regression of Salary on constant, Exp, and MVP. What is the coefficient on MVP? Is it statistically significant? What is the interpretation?

(i) Run an OLS regression of Salary on constant, PPG, RPG, APG, SPG, TOPG, Exp, and MVP. Is the coefficient on MVP significant? Why did the result change compared to (h)?

(j) Run an OLS regression of Allstar on constant, PPG, RPG, APG ,SPG, TOPG, Exp, MVP, and TWP. Is the coefficient on PPG significant? What is the interpretation?