3. Consider the graph below for Major League Baseball. The horizontal axis measures the team's on- base percentage, while the vertical axis measures the team's power, or slugging (in a slightly different way from Moneyball). R/G stands for the average number of runs per game. The graph identifies each team's actual combination of on-base percentage and power that they had in the 2010 season, along with isoquants associated with various numbers of runs per game. In this question, instead of firms producing a product from labor and capital, you should think of teams producing runs (that's their output) from on-base percentage and power. 2010 Major League Offenses Isolated Powe 0.210 TOR 0.190 0.170 0.150 0.130 0.110 0.090 5.5 R/G BOS NYY ARI MODCIN CHER DET TEXTL MIN JAA ST NYM PIT BADR EAS KCR OAK HOU SEA 3.0 R/G 3.5 R/G 0.070 0.295 0.305 0.315 0.325 0.335 0.345 0.355 On-Base Percentage 5.0 R/G 4.5 R/G 4.0 R/G a) Assume Baltimore (BAL) and San Diego (SDP) are maximizing their offensive output given their player budgets. Then, what does the isocost look like? Roughly reproduce this graph and draw it in. b) A movement directly outward on the graph, such as from St. Louis (STL) to Detroit (DET), in which the team was "producing more runs" per game, would be which: a scale effect, or a substitution effect? Why? c) Based on the graph, which team appears not to have selected an optimal mix of on-base percentage and slugging? How should this show up in their offensive performance? For this team, what will the intersection of the isocost and isoquant look like? d) In 2010, the year of this graph, all the other baseball teams had adopted the player selection strategy described in Moneyball. But in 2002, the season described in that book, the Oakland A's strategy was unique. In 2002, where would most of the other baseball teams have been located on the graph above: in the upper-left, upper-right, lower-left, or lower-right? Why?