When deciding the salary of a sports star,
A) the team must consider how much money the sports star should earn.
B) the team must consider how much the sports star will cause revenues to increase.
C) the team estimates the sports star's marginal product; because this is a guess, sports stars are generally underpaid.
D) the team will hire the sports star if doing so will increase the team's revenues.

Question

Quizplus · Accepted Answer

The team must consider how much the sports star will cause revenues to increase. This is because ultimately a sports star's salary is based on their ability to generate revenue and bring in fans. Teams are businesses, and they want to ensure that their investment in a sports star will lead to a return on that investment, typically through increased ticket sales, merchandise sales, and sponsorships.

When Deciding the Salary of a Sports Star