Stadiums and arenas built for use by professional sports teams are often paid for by local governments using tax dollars
What kind of goods are these stadiums and arenas, and why would government use tax dollars to pay for them when the professional sports franchises that use them are generally quite successful, financially?
Sports stadiums and arenas are examples of club goods, since they are nonrival but excludable. Governments would most likely agree to pay for these stadiums with tax dollars as opposed to having the teams fund them themselves because the local governments generally believe that the overall benefit of having the team and the new stadium outweighs the cost to the taxpayers who fund the building of the stadiums, and therefore increase the overall size of the economic pie.
You might also like to view...
To which of the following is a maximum price control most likely to be applied?
a. wages b. agricultural products c. alcohol d. rents
Refer to the accompanying figure. Suppose the solid line shows the current demand for coffee. In response to news that next year's coffee harvest will be extremely good due to favorable weather conditions, you should expect:
A. the quantity of coffee demanded to decrease, but no shift in the demand curve. B. the demand curve to shift to D(B) in anticipation of lower future prices. C. the demand curve to shift to D(A) in anticipation of lower future prices. D. neither a change in quantity demanded nor a shift in demand because it will be a long time before next year's coffee crop is harvested.