Mei is like all other managers in a perfectly competitive industry

except in one respect: because of her great sense of humour, people are

willing to work for her for half the going wage rate. All firms in the industry

have cost curves given by () = + 10 + 2

Here Q represents units

of output per day, M the salary paid to the manager, and w the regular wage

rate in the industry.

a. If all firms in the industry face an output price of $28 per unit, the going wage rate is $2/labour-day, and the market for managerial talent is

competitive, then how much more will Mei be paid than the other managers

in the industry?