Harvard University Once Paid Two Financial Managers, Who Helped Manage

Multiple Choice

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 their marginal factor costs exceed $25 million.
B) make sense if the value of their marginal product exceeds $25 million.
C) makes sense if their efficiency value calculates out to that level.
D) 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.