Question

The NCAA negotiates broadcast rights to “March Madness” (the annual men’s and women’s college basketball tournaments). It also regulates the value of college athletic scholarships. In these ways it is exercising _________. Group of answer choices

Both monopoly and monopsony power.

Monopoly power but not monopsony power

Monopsony power but not monopoly power

Neither monopoly nor monopsony power

Which of the following would be classified as “third degree price discrimination” by economists?

1.The Brewers charge a smaller price per ticket to season ticket holders than they would if those individuals purchased single game tickets.

2.The Brewers charge a smaller price per ticket to students (with proper ID) than they do to older adults.

3.The Brewers include a free drink and hot dog with the purchase of any single game ticket.

4.The Brewers kick a fan out of the stadium for giving the usher the “third degree”.

Answer 1

1> Neither monopoly nor monopsony power

In both of the cases, NCAA is the regulator, it is neither buying nor selling anything. It negotiates the broadcast right and also regulates the scholarship amount, so they are example of regulatory authority.

2> 2.The Brewers charge a smaller price per ticket to students (with proper ID) than they do to older adults.

Third degree price discrimination occurs when the difference in price is due to different segmentation of the customers. Here, smaller price is charged to the students, and higher price is charged to another customer segments which is older people.