Harvard University once paid two financial managers, who helped manage Harvard's $20 billion endowment, each about $25 million. Harvard defended their pay "as normal in the community of hedge-fund managers with which Harvard Management competes for talent." An economist probably would say that these pay levels:
A. make sense if the value of their marginal product exceeds $25 million.
B. make sense if their marginal factor costs exceed $25 million.
C. does not make sense because Harvard has the option of simply putting its funds into a random selection of assets that would do as well.
D. makes sense if their efficiency value calculates out to that level.
Answer: A
You might also like to view...
Drug dealers agreeing to sell drugs at a certain price is an example of
A. collective bargaining. B. a monopoly. C. a cartel. D. an entrepreneur.
Along an indifference curve,
A. the marginal utility of all items is equal. B. the prices of all goods are equal. C. the total satisfaction is the same. D. the marginal utility/price ratios of all items are equal.
What are the three coordination tasks that markets resolve?
What will be an ideal response?
Assume a money multiplier of 3. If the Treasury finances a $30 million expenditure by selling securities to the Fed, the effect of this transaction on the money supply is that it will
A) remain unchanged. B) rise by $3 million. C) rise by $30 million. D) rise by $90 million.