The opportunity wage is often a better measure of executive pay than

Question

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The opportunity wage measures the amount an executive could earn in their next best alternative job. It takes into account not only their skills and experience but also the difficulty of quantifying their output. This is in contrast to MRP (marginal revenue product) which attempts to measure the value an executive adds to a company, but can be difficult to quantify in the case of high-level executives. Therefore, B is the best choice. A is incorrect as executives do have an MPP (marginal physical product), which measures the physical output they create. C is also incorrect as derived demand refers to the demand for a product or service that results from the demand for another product or service, and is not directly related to executive pay.

The Opportunity Wage Is Often a Better Measure of Executive