The total value to society of having garbage removed is greater than the value of baseball games.Why, then, are baseball players paid more than garbage collectors?
A)Although the total value of garbage removal is greater than the total value of baseball, wages are determined by average values.
B)Garbage removal results in significant external benefits that are not captured in the price paid for garbage removal. As a result, wages of garbage collectors do not reflect their social benefits.
C)There is greater competition in the garbage collection industry than there is in Major League Baseball.
D)Wages do not depend on total values but marginal values. The marginal revenue product of baseball players exceeds the marginal revenue product of garbage collectors.

Question

Quizplus · Accepted Answer

Wages are determined by marginal revenue product - the increase in revenue from hiring one more worker. Baseball players generate more revenue for their teams than garbage collectors do for their respective employers, making their marginal revenue product higher and justifying their higher wages. The total value to society of garbage removal may be higher, but that does not directly affect the wages of garbage collectors.

The Total Value to Society of Having Garbage Removed Is