Prior to the 2017 season, the Atlanta Falcons, an American football team in the state of Georgia, discussed the possibility of introducing “street pricing” (a price reduction) for their concessions (i.e. food and drinks) at their home stadium in order to improve the fan experience, we will simplify the analysis and think of demand for concessions in bundles with each bundle representing a random combination of food, snacks, and drinks. Suppose the actual quantity demanded for a concession bundle prior to 2017 can be represented by the following demand function: Qc = 3500 – 62.5Pc – 25Pt where QC is the number of concession bundles sold during a season (measured in thousands), PC is the price of one concession bundle (the average amount spent at a game per fan), and P­T is the price of a ticket to a game. a. Given an average ticket price (Pt) of $80, what is the own-price elasticity (OPE) of demand for concessions when Pc is $16? Show your work as much as possible, including the formula for own price elasticity. b. Given the elasticity of demand from part (a), what would happen to total concession revenues if the Falcons go forward with the proposed “street pricing” and reduce the price of concessions? How do you know based on your understanding of own price elasticities?

Problem III (40 points) Consider a two-period endowment economy with two consumers — i E {1,2} — who wish to maximise their
utility,
WEI-.01) =1n(6i)+ 5111(4) subject to the budget constraints iii—t
c: — yfi-t£+(l+r)s.- Ci+Ss Where c,- and c’i are the current and future consumption, and s,- is the amount of savings, for i 6 {1,2} Each
consumer receives exogenous income y; and y: and pays taxes t and t’ in each period. The interest rate is given
by r. There is a government that needs to spend G and G" respectively in the current and future period. The
government can finance its expenses with tax or debt. that is, the government’s budget constraint are given by G
G’+(1+r)B T+B
T’ where T = 2t and T’ = 2t’ (since there are two people in this simple economy). (15 points) Explain what the variable 3 captures. Carefully define the competitive equilibrium (c:.c£’, si’)
both for the consumer’s maximisation problem as well as the credit market. Make sure to explicitly
identify all the endogenous variables and the conditions they must satisfy. . (5 points) Suppose that t = t’ = G = G” = 0, y1 = yi = ya = ya, and 61 > fig. Which consumer consumes more in the first period? about in the second period? Provide an intuition for your answer (no algebra is necessary). ‘ (5 pOlIltS) Suppose that t = t, = G = G, = 0| fil = (32 < 1! (ylvyi) = (10:5)9 and (“21 ya) = (5! 10)’ WhiCh consumer consumes more in the first period? about in the second period? Provide an intuition for
your answer (no algebra is necessary). . (5 points) Suppose that t = t’ = G = G’ = 0,61: 52 =1, 1;; = y’i, and y: = ya. do you expect will be the consumers savings? about government debt? Provide an intuition for your answer (no
algebra is necessary). . (10 points) Consider again the parameters described in part (3.4), but with a new timing for taxes. now denoted by f and t". Suppose t = —1. Compute government debt in this case. Compute t’ that balances
the government’s present value budget constraint. do you expect will be the consumers savings?
Would consumers’ welfare change as a result of this change in taxation timing. Explain the economic intuitions.

answer QUESTION 17 I am trying to figure out how to measure an athlete’s productivity. So, I have run a linear regression ofa NBA player’s salary
(dependent variable) on a player’s statistics including average points, assists, rebounds per game, and turnovers per game (the independent variables). The final model is: Salary = 1,000,000 * Points per game + 50,000 * Assists per game + 20,000 * Rebounds per game – 30,000 *
Turnovers per game Last year, Lebronjames averaged 25 points per game, 8 assists per game, 8 rebounds per game and 4 turnovers per game is
Lebron’s predicted salary?

In this question, we’ll consider a version of the authority model where the principal works with two
agents, each on a separate project. There is one principal who is in charge of two projects, i = 1, 2. The principal hires one agent for
each project; we identify the agent associated with project i as Agent i. Each Agent i separately chooses eEort £21′ to produce an idea for his own project 1′. Each Agent i’s
efl’ort cost is is? . At the same time, the Principal P chooses effort levels E1 and E2 to devote to each project. Her total effort cost is :flE1 + E2)2. The probability that Agent 1′ produces an idea for Project i equals his effort 8;. The probability that
P produces an idea for Project 1′ equals E,. For Project 1: if the Principal’s idea is implemented, then the Principal and Agent 1 both receive 1.
Ingent 1’s idea is implemented, then the principal receives 0 < a] < 1 and Agent 1 receives 1. For Project 2: as long as either the Principal’s or Agent 2’s idea is implemented, then both players
receive project values of 1 each. Notice that this means neither agent cares whose idea (his own versus the principal’s) is imple-
mented for their project. The principal does not care whose idea is implemented for project 2, but
prefers to implement his idea over Agent 1’s idea for project 1. P’s total payoff is the sum of his project values from both projects, minus her efl’ort cost %(El + Elf.
Agent is payoff is his project value from his own project, minus his effort cost ail/2. The timing of the game is: 1. Each A, chooses effort level 2,. At the same time, P chooses E1 and E2.
2. Each player’s attempt (to generate an idea) either succeeds or fails.
3. For each project, P chooses which idea (if both are successful) to implement 4. Payofls are realized. c) Work out the equilibrium levels of the agents’ effort choices £1 and £2, and the Principal’s effort choices, E1 and E2. (You’ll have to solve a system of four simultaneous equations, each of which
correspond to one of the first-order conditions. nt: once you have the four equations, it ma},r be
convenient to find a way to solve for E1 first.)

True OR False 1. Without government regulation of the private economy, average income will not grow over time. True OR False 9. Suppose income taxes rise only on incomes over $250,000 annually. Then your after-tax income will be unaffected if your annual income is only $100,000. True OR False 10. In order for observed prices to converge to competitive market clearing prices, the participants must understand what they are doing, so they don’t make mistakes in their buying or selling decisions.