Sports Economics 3123 Second Midterm Exam Cheap calculators only Total points 60 Use an answer sheet Use a pencil to mark the best answer Question 1 6 founding year The chart below plots the competitive balance statistic R for the NBA since 1947 its NBA competitive balance ratios 4 0 3 5 3 0 2 5 2 0 1 5 1 0 0 5 0 0 1940 1950 1960 1970 1980 1990 2000 2010 The lowest value for R was 0 86 in 1956 7 marked as a diamond above Eight teams played 72 games this season the table below shows the final standings City Boston Syracuse Philadelphia New York Fort Wayne Minneapolis St Louis Rochester 1 Team Celtics Nationals Warriors Knicks Pistons Lakers Hawks Royals Winning percentage 0 611 0 528 0 514 0 500 0 472 0 472 0 472 0 431 This observed R in 1956 a indicates that competition among these 8 teams was well balanced that year b indicates that competition among these 8 teams was poorly balanced that year c suggests that the NBA would lengthen the season in subsequent years d suggests that the NBA would expand the number of teams in subsequent years e none of the above 2 2 The ideal standard deviation for the 1956 season is a 0 500 b 0 051 c 0 059 d 1 0 e none of the above 3 The observed standard deviation for the 1956 season is a 0 500 b 0 051 c 0 059 d 1 0 e none of the above 4 If the Celtics had beaten the Royals once more during this season then a the R statistic would have increased b the R statistic would have decreased c the R statistic would be unchanged d the R statistic would equal 1 e the R statistic would equal 0 5 If the Celtics had lost to the Royals once more during this season then a the R statistic would have increased b the R statistic would have decreased c the R statistic would be unchanged d the R statistic would equal 1 e the R statistic would equal 0 6 In 2012 thirty NBA teams played an 82 game season For that year the R was 2 76 a The R statistics for 1956 and 2012 are not comparable because R s less than 1 0 are theoretically impossible b The R statistics for 1956 and 2012 are not comparable because the number of teams has increased c The R statistics for 1956 and 2012 are not comparable because the length of the season has increased d The R statistics for 1956 and 2012 are not comparable because the 3 point shot was not allowed in 1956 e The R statistics for 1956 and 2012 are comparable measures of competitive balance 7 The NBA plays an 82 game season The standard deviation of winning percentages for the 30 teams in the NBA in 2005 6 was 0 136 The NFL plays a 16 game season The standard deviation of winning percentages for the 32 teams in the NFL in 2005 was 0 212 The theoretical ideal standard deviations for competitively balanced leagues are a 0 055 for both b 0 125 for the both c 0 125 for the NBA and 0 055 for the NFL d 0 055 for the NBA and 0 125 for the NFL e none of the above 8 When the competitive balance R equals 2 this means a that all teams in this league won half their games b that the observed standard deviation of winning percentages for this league equals 2 c that the observed standard deviation of winning percentages for this league is one half its theoretical ideal where every game is a toss up d that the observed standard deviation of winning percentages for this league is twice its theoretical ideal where every game is a toss up e none of the above 3 9 If all sports leagues achieved the ideal competitive balance then for any given season we would expect the standard deviation of wining percentages to be a equal for all sports b largest for the NFL c largest for the MLB d smallest for the NBA e largest for the NBA 10 The Hirfindahl Hirschman Index HHI a is the area under the Lorenz curve b is measured as the ratio of two standard deviations c compares end of the season standings to that in an ideal league where every team has an even chance in every game d measures competitive balance in terms of the number championships over many seasons e is a sum of square roots of the number championships over many seasons 11 During the first decade of this century the Lakers won four NBA championships the Spurs three and the Pistons Celtics and Heat have won one each The HHI for this decade is a 0 b 0 10 c 0 28 d 0 50 e none of the above 12 The minimum possible value of the decade long HHI is a 0 b 0 1 1 c where N number of teams in the league N 10 d where N number of teams in the league N2 e none of the above 13 Which has not been justified as promoting competitive balance a multi sport stadiums b the reverse order draft c the salary cap d relegation and promotion e the luxury tax 14 According to the Coase Theorem establishment of the reverse order draft and free agency should leave the distribution of talent a more equal than before b less equal than before c the same as it was before d exactly equal among all teams e none of the above 4 Question 15 19 The table below shows regression output R is the dependent variable time equals 0 in 1949 50 increasing to 63 in 2012 13 post lockout 1 is a dummy variable equal to 1 between 1998 9 and 20012 13 equal to 0 otherwise The 1998 9 season was shortened to 50 games by a labor dispute It ended with a new contract between the owners and the union that remained in force for more than 10 years SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations intercept time post lockout 1 0 441 0 194 0 169 0 457 67 Coefficients 2 196 0 016 0 409 Standard Error 0 110 0 004 0 194 t Stat 19 989 3 818 2 113 P value 0 000 0 000 0 039 15 The estimated multiple regression equation is a R 2 20 0 016 time 0 41 post lockout 1 b R 0 110 0 004 time 0 194 post lockout 1 c R 19 99 3 82 time 2 11 post lockout 1 d R 0 0 0 0 time 0 039 post lockout 1 e none of the above 16 The underlying theory associated with the post lockout 1 variable is a that the 1999 contract improved the NBA s competitive balance b that the NBA s competitive balance has worsened over time c that the NBA s …