Question

3. Briefly name and describe two (quantitative) measures of competitive balance. Which measure do you think best captures the concept, and why?

4.Explain the link between diminishing returns and competitive balance.

5.Explain the invariance principle, i.e. why, with or without Free Agency, Babe Ruth (perhaps history’s most famous baseball player) was destined to play for the Yankees.

Answer 1

Answer;

3. Two (quantitative) measures of competitive balance;

• The two quantitative measures of competitive balance are as follows:

1. Actual standard deviation
2. Relative standard deviation

• The relative standard measures best captures the concept since of the following reasons:
• This is also called as the percentage relative standard deviation which provides the value adjustment in a prominent way.
• It clearly describes, how the different numbers of a particular series of a data are scattered surrounded the mean.
• It is also helpful in explaining whether the product comes lower or higher and it depends on the numbers are closer than its average or not.
• If numbers are closer to the average than it means that product comes lower and vice-versa.
• It is divided the data and that’s why it is useful for the differentiate between the data values.

4. The link between diminishing returns and competitive balance

• The law of diminishing returns explains that adding one extra unit factor of production will at some point yields lower per units returns.
• As addition good players will add less and less to a team’s performance on the field and at box office.
• Addition an all-star goalie will not take many more wins if a hockey team already has an all-star goalie. So marginal benefit of second goalie is probably less than marginal cost of hiring him.
• For example a result wealthiest teams do not have an incentive to sign all the best players.
• Diminishing returns thus add to competitive balance

5. Invariance principle :-

It is a simple attempt to explain similarities and dissimilarities between how an idea is understood in ordinary usage and how it is understood when used as a conceptual metaphor. It offers the hypothesis that only maps components of meaning.

Babe Ruth :-

• Goerge Herman “Babe” Ruth Jr. was an American professional baseball player. He was famous for his work for New York Yankees as a Batter.
• In Babe Ruth’s first year with the Yankees in 1920, he hit 54 homers to break his own record. the Yankees were ready to offer Ruth a contract of $20,000 per year.
• Some people criticized this contract and some are in favour to this. Many economists recognized this deal as being true from a financial perspective.
• They felt that Ruth was more valuable to the Yankees. Ruth did lead the Yankees to success in the standings and also in box office.