Many professional sports teams operate under a salary cap. This means that teams typically have a fixed amount of money that they can spend on players' salaries - that is, a salary cap. This is true of the National Basketball Association (NBA), for example. Suppose that the NBA has a salary cap of $100 million dollars, and a team has $30 million available to sign new players. That is, $70 million has already been committed to player salaries. The team has two further possibilities: either sign a star player for $30 million, or sign two good, solid supporting players for $15 million each. Finally, what would be the opportunity cost of signing the star player, say, if there were no salary cap? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a b C d There is no opportunity cost $15 million $30 million $70 million Export Fullscreen
Many professional sports teams operate under a salary cap. This means that teams typically have a fixed amount of money that they can spend on players' salaries - that is, a salary cap. This is true of the National Basketball Association (NBA), for example. Suppose that the NBA has a salary cap of $100 million dollars, and a team has $30 million available to sign new players. That is, $70 million has already been committed to player salaries. The team has two further possibilities: either sign a star player for $30 million, or sign two good, solid supporting players for $15 million each. Finally, what would be the opportunity cost of signing the star player, say, if there were no salary cap? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a b C d There is no opportunity cost $15 million $30 million $70 million Export Fullscreen
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
Problem 5P
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