Explain your answers clearly and coherently -- pretend that you are explaining your answer to someone who is not in this class. If you only write one sentence, your explanation is not adequate. All answers must be in your own words.
1. (5.2 from the text) Explain how the law of diminishing returns provides a natural tendency towards competitive balance. [HINT: Think about the impact on competitive balance if an NFL team signed the top 3 quarterbacks in the league. How much would the 2nd and 3rd quarterback help the team?]
2. (A) Explain in your own words what the standard deviation measures -- do not give me a definition or copy an explanation. (B) How can we use the standard deviation to measure a league's competitive balance within a season? How would we use it to measure competitive balance across seasons? (C) If the standard deviation of winning percentages among teams in a league is 0.2, how would you interpret that number?
3. (5.6 from the text) What is free agency? Why do economists believe that free agency doesn't really affect competitive balance?
4. Go to https://www.forbes.com/lists (Links to an external site.). Pick two of the 4 major sports in the US (NFL, NHL, MLB, and NBA). Which league (of the 2 you chose) has a more equal distribution of revenue? Explain carefully how you are analyzing the data and what you found. NOTE: This question will be graded based on your explanation, not on your answer -- i.e. if I do not understand your explanation you will not receive credit.