There are two types of hockey players: 1) goal scoring \"stars\" and 2) \"grinde

Question

There are two types of hockey players: 1) goal scoring "stars" and 2) "grinders" or "non-stars." Stars are in short supply, so that there are not enough star players to fully stock the teams in the NHL. On the other hand, the supply of non-stars is unlimited. Using carefully labelled diagrams, describe the relative pay of stars and non-stars for each of the following situations:

2. Players become free agents after a few years. That is players are free to change teams (going to the highest bidder) after a few years with the team that drafted them.

The solution is :

Players become free agents after a few years. That is players are free to change teams. Allowing them to change teams will eliminate pay differential since goal scoring "stars" will now be paid all equally.

Can someone explain what this looks like in a diagram? Is the supply curve for stars horizontal because all stars are paid equally?

Explanation / Answer

When stars are in short supply the supply curve of stars will be relatively steep as compared to the supply curve of non stars whose supply is unlimited and thus supply curve will be steep as compared to the supply curve of stars.

When all are paid equally and players are free agents then the supply curve will become horizontal. No differential exists and thus at the given rate many players will be available.

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