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