The professional baseball league on planet Economus allows team owners to draft players for life. Once a player is acquired in the draft, team owners may trade players to other teams. The demand for high quality players is:
= 2,000 -
. The supply of high quality players is:
=
- 500. What is the lowest price necessary to induce an owner to trade a high quality player. Determine the equilibrium price and quantity of high quality players. The demand for low quality players is:
= 400 -
. The supply of low quality players is:
=
- 125.
Determine the equilibrium price and quantity of low skill players. Now, suppose that only the team that has the rights to the player knows the quality of the player. This implies the new demand for players of uncertain quality is: Q^D = 1,200 -
. The supply of players becomes:
Q^S = {
Derive the equilibrium price and quantity for players of uncertain ability. Do you believe any high quality players are being traded at this new market price?

Question

The professional baseball league on planet Economus allows team owners to draft players for life. Once a player is acquired in the draft, team owners may trade players to other teams. The demand for high quality players is:

= 2,000 -

. The supply of high quality players is:

=

- 500. What is the lowest price necessary to induce an owner to trade a high quality player. Determine the equilibrium price and quantity of high quality players. The demand for low quality players is:

= 400 -

. The supply of low quality players is:

=

- 125.
Determine the equilibrium price and quantity of low skill players. Now, suppose that only the team that has the rights to the player knows the quality of the player. This implies the new demand for players of uncertain quality is: Q^D = 1,200 -

. The supply of players becomes:
Q^S = {

Derive the equilibrium price and quantity for players of uncertain ability. Do you believe any high quality players are being traded at this new market price?

Quizplus · Accepted Answer

The Answer of The professional baseball league on planet Economus allows team owners to draft players for life. Once a player is acquired in the draft, team owners may trade players to other teams. The demand for high quality players is: = 2,000 - . The supply of high quality players is: = - 500. What is the lowest price necessary to induce an owner to trade a high quality player. Determine the equilibrium price and quantity of high quality players. The demand for low quality players is: = 400 - . The supply of low quality players is: = - 125. Determine the equilibrium price and quantity of low skill players. Now, suppose that only the team that has the rights to the player knows the quality of the player. This implies the new demand for players of uncertain quality is: Q^D = 1,200 - . The supply of players becomes: Q^S = { Derive the equilibrium price and quantity for players of uncertain ability. Do you believe any high quality players are being traded at this new market price?

The Professional Baseball League on Planet Economus Allows Team Owners