February 12, 2014

Economics & Finance

GDP=C + I + G

ConsumptionConsumer debt• Used to fund consumption

Disposable income• (total income) – (taxes)• Consumption + savings

Discretionary income• (total income) – (taxes) – (essentials)• This is where the money to attend sporting events

comes from

The G

• Government spending• Professional sport is the most subsidized

industry in America• Subsidy– Transfer payments to assist industries that benefit

the public

They are gonna tear down the Dome?Are you serious??!!??

• 44,000 seat arena w/ retractable roof• Located off campus• $495 million built with public & private funds• Syracuse University would be a tenant• Syracuse is a private university

Turner Field/Olympic Stadium

Going, Going, Gone

Mayor Ivan Allen commandeered land from the Rawson Street urban renewal project to construct his baseball stadium. This land, which was originally designated for residential use, became the site of the Atlanta–Fulton County Stadium, the original home of the Atlanta Braves. Commenting on the stadium years after it was built, Allen stated, “We built a stadium on ground we didn’t own with money we didn’t have for a team we hadn’t signed.”

Turner Field

• Built for 1996 Olympic Games as 85,000 seat stadium

• $170 million of $209 million was private financing

• Currently owned by Fulton County Recreation Authority and leased to the Braves for $1 million per year– Lease expires in 2016– Current seating capacity approx. 49,600

In 2017• Braves move to a new 42,000 seat stadium• $672 million dollars (financed in part via G)• 10 miles from downtown Atlanta

Supply Side Economics

• Tax cuts provide economic growth

• Stimulates investment– Business sector invests

tax savings in capital equipment

– Economy grows– Tax receipts rise (grocery

store mentality)

• Places too much faith in the ability of tax cuts to increase investment

• If consumers are not buying an increase in investment by businesses is not going to get them to start

• Boosted consumption by the employed

• Preferences– A household’s preferences determine the benefits

or satisfaction a person receives consuming a good or service.

– The benefit or satisfaction from consuming a good or service is called utility.

• Total Utility– Total utility is the total benefit a person gets from

the consumption of goods. Generally, more consumption gives more utility.

Maximizing Utility

• Marginal Utility– Marginal utility is the change in total utility that

results from a one-unit increase in the quantity of a good consumed.

– As the quantity consumed of a good increases, the marginal utility from consuming it decreases.

– We call this decrease in marginal utility as the quantity of the good consumed increases the principle of diminishing marginal utility.

Maximizing Utility

– Figure 8.1(a) shows a total utility curve for soda.

– Total utility increases with the consumption of a soda increases.

Maximizing Utility

– Figure 8.1(b) illustrates diminishing marginal utility.

– As the quantity of soda increases, the marginal utility from soda diminishes.

Maximizing Utility