Question

1. Does a sport team enhance the local economy?

2. Does sports facilities / stadiums justify financial support from cities and states?

3. What is Stock market crashes? explain with bubble.

4. Why capitalism needs bankruptcy laws?

5. why medicare's costs are high?

Answer 1

1) Yes, they do. A sports team are the representative of the local area. If they are doing good apart from winning medal and trophies they also attract a lot of tourists who come to the local economy to watch them play. Apart from this, a performance by the local team generates demand in the economy. For example, I am from the UK whenever my team plays I would like to cheer for them in a local bar with my friends, we would spend some money in ordering food and beer which we would not have if there was no match. We buy goods related to our team, products which are endorsed by our Players all this generate demand and boost the economy.

2) Yes, they do. For example, a big stadium in a center of the city will organize matches involving a big team. This will again attract a lot of tourists, they will spend money on hotels, restaurants, souvenirs, sightseeing and other product related to my city. The will also demand local product which is famous in my city all this will help local people sell a lot of their product in the sports seasons. When these spectators came here they used a train or a car or an airplane to travel all this will generate some economic value int eh economy.

3) A bubble is a situation when all the people expecting a good return from a stock rush to buy it. This increased demand for that particular stock increase the price and make people believe that the return they expected will be high. But, when what they thought doesn't materialize they sell those stock with the same quickness and cause the stock market to crash. This happens because people invest without evaluating the true value and only on hearsay.

4) Because business is all about timing. If today the market of Barcelona jersey are high people will start manufacturing it. But when the demand for those jerseys is down (maybe Barcelona didn't do better this season) then I have to look for some other business my present business didn't make much profit and I am in debt. If there are no bankruptcy laws I have to sell everything I have to pay my debts back. This will be the situation with other business as well. People will be very reluctant to take any business decision in the future and this will affect the investment and then the demand in the economy.

To allow the businessmen to exit from an unprofitable business we need a bankruptcy law.

5) Because we don't have any substitute for Medicare and our demand are highly inelastic. When we need Medicare we just need them, we will die if we didn't take the medicare. This sudden demand and lack of any other option make the Medicare costs high.