Name: Answers
Econ 2447 Sports Economics
Final exam T. Miceli
Spring 2017
Multiple choice. Write your answer in the space provided. (4 points each)
_b_ 1. In major league baseball, a plot of team winning percentage against team salary reveals
(a) No correlation.
(b) A slight positive correlation.
(c) A negative correlation.
(d) None of the above.
_a_ 2. The “Moneyball Hypothesis” contended that, prior to the early 2000’s, major league teams
(a) Undervalued on-base percentage and overvalued home runs.
(b) Undervalued power hitters.
(c) Did not base salaries on performance at all.
(d) Based salaries on longevity in the league.
_d_ 3. Giving teams exclusive rights to innovative training or other management strategies would
(a) Be like granting firms patent protection for inventions.
(b) Harm the goal of maintaining competitive balance in the league.
(c) Be very difficult to
enforce. (d) All of the above.
_d_ 4. Actual player salaries are generally below their marginal revenue products (MRPs) because
(a) Bargaining between players and teams over salaries splits the surplus.
(b) Teams need to expect a positive return from players to cover training costs.
(c) In bidding for free agents, the winning team only has to bid the value of the player to the
second- highest bidder.
(d) All of the above.
_b 5. The principal-agent model in economics is concerned with
(a) Safety of the work environment in employment relationships.
(b) The nature of the contract between the employer and employee.
(c) Providing equal pay for all workers.
(d) None of the above.
a_ 6. Performance-based contracts in sports are
(a) Aimed at giving players an incentive to exert effort.
(b) Popular with players because they subject them to performance risk.
(c) Not desired by team owners.
(d) Prohibited in professional sports.
d_ 7. Long-term contracts with guaranteed salaries
(a) Are not popular with team owners.
(b) Counteract incentives for player effort.
(c) Are popular with players because they protect them against performance
risk. (d) All of the above.
c_ 8. Teams have an incentive to invest in player training
(a) In a world of complete free agency.
(b) Regardless of what the labor market is like for players who make the majors.
(c) Only if players are tied to their original teams for a set number of years before free agency.
(d) All of the above.
Econ 2447 Sports Economics
Final exam T. Miceli
Spring 2017
Multiple choice. Write your answer in the space provided. (4 points each)
_b_ 1. In major league baseball, a plot of team winning percentage against team salary reveals
(a) No correlation.
(b) A slight positive correlation.
(c) A negative correlation.
(d) None of the above.
_a_ 2. The “Moneyball Hypothesis” contended that, prior to the early 2000’s, major league teams
(a) Undervalued on-base percentage and overvalued home runs.
(b) Undervalued power hitters.
(c) Did not base salaries on performance at all.
(d) Based salaries on longevity in the league.
_d_ 3. Giving teams exclusive rights to innovative training or other management strategies would
(a) Be like granting firms patent protection for inventions.
(b) Harm the goal of maintaining competitive balance in the league.
(c) Be very difficult to
enforce. (d) All of the above.
_d_ 4. Actual player salaries are generally below their marginal revenue products (MRPs) because
(a) Bargaining between players and teams over salaries splits the surplus.
(b) Teams need to expect a positive return from players to cover training costs.
(c) In bidding for free agents, the winning team only has to bid the value of the player to the
second- highest bidder.
(d) All of the above.
_b 5. The principal-agent model in economics is concerned with
(a) Safety of the work environment in employment relationships.
(b) The nature of the contract between the employer and employee.
(c) Providing equal pay for all workers.
(d) None of the above.
a_ 6. Performance-based contracts in sports are
(a) Aimed at giving players an incentive to exert effort.
(b) Popular with players because they subject them to performance risk.
(c) Not desired by team owners.
(d) Prohibited in professional sports.
d_ 7. Long-term contracts with guaranteed salaries
(a) Are not popular with team owners.
(b) Counteract incentives for player effort.
(c) Are popular with players because they protect them against performance
risk. (d) All of the above.
c_ 8. Teams have an incentive to invest in player training
(a) In a world of complete free agency.
(b) Regardless of what the labor market is like for players who make the majors.
(c) Only if players are tied to their original teams for a set number of years before free agency.
(d) All of the above.
