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A county with 1M (M for million) population, 2% unemployment, and no in action, voted to build a stadium and rent it to a professional baseball team. The team owner, who was not a county resident, was to pay $1M per year rent for use of the stadium and pay all maintenance costs. The owner would be responsible for the sale of admission tickets, parking, and concessions (sale of food and memorabilia) and would keep all resulting prots. A cost Benet analysis of the project made the following estimates, treating the county as the community. Construction of the stadium, parking lots, and access roads would cost $300M, 60% of this to be spent on local value added (LVA) provided by county residents. The county would borrow $300M at the beginning of the project to pay for the construction and would repay the loan by raising its property tax. The land for the stadium site, valued at $15M, was already owned by the county. Two million tickets for stadium events would be sold per year, 70% of them to outsiders and the rest to locals (county residents), at an average ticket price of $35. For simplicity assume that every ticket would cost $35. Outsiders would spend an average of $20 on LVA per ticket they bought. This spending would be on local restaurant services, hotel rooms, and other goods and services provided by county residents. In answering the problems below, assume that the annual ticket sales and outsider spending listed above would continue throughout the 40 year lifetime of the stadium. Assume that the locals' marginal propensity to consume LVA was 30% and that their prot rate was 20%. Except in part i below, assume that all the numbers given above are correct. a. Write a formula for the net generated income coming directly from the construction part of the project. Estimate this net generated income, explaining each part of your formula and why you pick each of the numbers you use to get your estimate. Explain why the net new spending on LVA is not equal to the $180M in construction cost that is spent on LVA.
For each of the following situations, find the consumer’s optimal bundle. Be sure to show your work. Also, for each case, draw the consumer’s budget constraint, indicate the optimal bundle on the graph, and accurately draw the indifference curve that..
Arian is about to borrow $2,587.11 from his uncle. He has an option to repay the loan at the end of year 4 with 3.11% simple interest per year or with 6.8% interest per year, compounded annually. What is the difference of the total interest paid over..
One day you realize you're tired of smelling like refried beans all the time and begin thinking about starting your own business. After doing some investigation you decide to spend 15 hours per week running a photocopy service in your dorm.
Which of the following would not occur in the short run if a binding price floor were raised in perfectly competitive market? What is price discrimination? Assume that the wholesale skim milk market is perfectly competitive. Suppose demand is describ..
What does the Taylor rule imply that policymakers should do to the fed funds rate under the following scenarios?
Why might failure to specialize explain why Neanderthal groups in difference areas did not trade?
Your aunt is thinking about opening a hardware store. She estimates that it would cost $500,000 per year to rent the location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant. Calculate your aunt's expe..
Use your own life experience to explain the difference between the marginal and the average propensity to consume. In what circumstances could more saving be bad for the economy as a whole (search the Internet for the “paradox of thrift”)?
When she hired a fourth worker, her total product increased but by only 1,000 bullfrogs. Yolanda pays $1,000 a week for equipment and $500 a week.
Elucidate why from an economic point of view towing a car illegally parked rather than just ticketing it provides a better incentive.
If a company gets rid of a coupon does this shift the demand curve or just move a point on the demand curve.
Consider the owners of Cutitforme, a small lawn-mowing service. They can use one of two methods to mow lawns. Method 1 is to purchase a tractor that costs $200 a year to own and then spend $1 (for labor and gas) for every acre of grass cut. The total..
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