How Are the Various Principles of Economics Demonstrated in the Podcast of Lebron James - Essay Example

the total dollar amount LeBron James could earn if he sold out all the games can reflect his worth. When we look at the ticket pricing approach it is clear that the USA basketball ticketing market is imperfect. In other words, the equilibrium price of the tickets to the basketball games is not reflected in the market price. According to the speakers, there is a “shadowy-underworld market” where the real market price is derived. When a black market exists, the cost to the government can be measure in terms of foregone tax income. Moreover, information regarding black markets is unavailable to policymakers. Therefore the income derived from black market operations is excluded from national accounting such as calculation of the GDP. The predictability of the economic data can decrease due to black market operations. Therefore, the efficiency and effectiveness of the government policies also decrease. These can be considered as the social costs of black market operations. Unavailability of information is a typical characteristic of the black markets. According to the speakers, there are agents who buy the tickets to basketball games and resell them at a higher price and earn a profit. It is unclear how many middlemen are involved in the market chain and whether LeBron James’s income reflects the actual price of tickets sold in the secondary market. Nevertheless, the speakers claim that like in other markets “risk and uncertainty” affect the secondary market operation of basketball tickets in the USA.

The second approach discussed in the podcast involved the utility concept. It measures the sold benefits as well as the non-market values. For example, the local community gains utility when LeBron James lives in their city. Therefore, he adds value to the Gross National Happiness of the economy. Moreover, viewers gain utility by meeting friends, and associates at the basketball games. Therefore, LeBron James adds various utilities to the economy that cannot be quantified absolutely. In economics, utility is measured by a hypothetical unit called the utile. The absolute utile value which is gained by watching LeBron James playing basketball is impossible to define however, a relative value can be estimated, For example, the viewer gets 10 utile by watching a game of other players and gets 20 utile by watching LeBron James. Therefore, the added utility by LeBron James to the market is estimated at 10 utile in the above example. However, the decision made by LeBron James in selecting the Miami Heat was a wrong decision according to this theory. NY Knicks and Chicago Bulls were better choices because the highest added utility values are derived in these cities respectively. Speakers also discussed that the marginal utility of players decreases with adding more famous players to the same city. Consequently decreasing the utility added by individual players to the country.