Comparative Advantage-Part 1

Activity

This lesson requires an understanding of the concepts of comparative and absolute advantage. Watch this slide show for a brief introduction.

Then, answer the questions below.

Quiz

Ms. Jackson is coaching the Wahoo Hornets soccer team this year and needs to decide who will be the team goalie. She has compiled some team statistics from past practices. Look at the following table before taking the quiz.

 

# of goals

# of blocked goals

Sara

14

12

Micah

5

6

Research

Let's take a look at a slightly different application of comparative advantage. Look over the following tables and read this article about Babe Ruth.

Pitching Records of the Boston Red Sox
1915-1918

Wins

Losses

Wins/(Wins + Losses)

Foster

41

22

0.651

Shore

48

34

0.585

Leonard

57

42

0.576

Mays

67

40

0.626

Ruth

78

40

0.661

Total

291

178

0.620




Hitting Records of the Boston Red Sox
1918-1919

At Bats

Hits

Batting Average

Home Runs

Runs Batted In

Team

6,647

1,789

0.269

46

754

Ruth

749

234

0.313

40

180

Ruth/Team

0.113

0.131

--

0.87

0.24


Hitting Records of the New York Yankees
1920-1924

At Bats

Hits

Batting Average

Home Runs

Runs Batted In

Team

21,891

6,655

0.304

516

3,337

Ruth

2,455

908

0.370

235

659

Ruth/Team

0.112

0.136

--

0.455

0.197

Pitching Records of the New York Yankees
1920-1924

Wins

Losses

Wins/(Wins + Losses)

Mays

66

44

0.600

Shawkey

90

59

0.604

Hoyt

73

47

0.608

Bush

62

38

0.620

Jones

43

27

0.614

Pennock

40

15

0.727

Quinn

26

17

0.605

Collins

25

13

0.658

Total

425

260

0.620

Quiz

1. What is the Yankees' opportunity cost of using Babe Ruth as a pitcher? Note: A pitcher does not usually pitch in every game and hence, will not be in the batter lineup every game.

2. In what position(s) did Babe Ruth have an absolute advantage playing for the Red Sox?

3. In what position(s) did Babe Ruth have a comparative advantage playing for the Yankees?

4. If the Yankees had a poor pitching staff, in which position(s) would Babe Ruth have a comparative advantage?

5. What is the best estimate of Babe Ruth's potential as a hitter for the Yankees?

Discussion

If you were the manager of the New York Yankees in 1920, would you want Babe Ruth to be a starting pitcher or an outfielder for your team?

Now go on to Part 2