Answer to Question #49588 in Macroeconomics for Christoph

Question

In order to meet new Homeland Security guidelines, the Eagles install new facial recognition technology that can instantly identify all patrons entering Lincoln Financial Field. Installing the new security system costs the team $150 million. Once installed, it is essentially costless to operate. Use the appropriate economic framework to derive the impact of installing this system on ticket prices to Eagles games.

Answer 1

If the Eagles install new facial recognition technology that can instantly identify all patrons entering Lincoln Financial Field. If installing the new security system costs the team $150 million and, once installed, it is essentially costless to operate, ticket prices to Eagles games will be increased by some amount, because this investment need to be covered during some period, for example, 5 years. So, the price will rise by some fixed amount.