Through the 2016 season, Nick Saban\'s record as the head football coach at the

Question

Through the 2016 season, Nick Saban's record as the head football coach at the University of Alabama was 119 wins and 19 losses. The $11.125 million salary the university paid him in 2017 was the highest received by any college football coach. Yet ESPN commentator Scott Van Pelt argued, "Alabama is still getting a bargain in Nick Saban, and I guarantee you that they know that."

Source: Ben George, "ESPN's Scott Van Pelt Explains Why Nick Saban Is Underpaid," espn929.com, May 4, 2017.

Is it possible that Saban might be underpaid?

A. Yes. The total value of winning football games at Alabama is greater than the total value of winning football games at other universities.

B. No. If Saban's marginal product is not greater than other successful football coaches, then Saban is not worth more.

C. Yes. Saban's marginal product might not be greater than other successful football coaches, but Saban's marginal revenue product is substantially higher because revenue generated from winning at Alabama is much greater.

D.Yes. Saban's marginal product and his marginal revenue product must both be larger than other successful football coaches.

E.Yes. Saban's marginal revenue product might not be greater than other successful football coaches, but Saban's marginal product is substantially higher because revenue generated from winning at Alabama is much greater.

Explanation / Answer

A worker must be paid according to the marginall revenue he generates.

Thus teh correct option is (c). Even if Saban is being paid higher than others. This wage is still sub optimal compared to his output if the wage is not equal to the marginal revenue he generates.

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