Perfectly competitive industry except in one respect

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Merlin is like all other managers in a perfectly competitive industry except in one respect: Because of his great sense of humor, people are willing to work for him for half the going wage rate. All firms in the industry have short-run total cost curves given by TC = M + 10Q + wQ2, where M is the salary paid to managers and w is the wage rate. This total cost curve has a marginal cost curve of MC= 10 + 2wQ. All firms in the industry have the same short run economic profits, and face a market price of $28. If the wage rate for all other firms is w = 2, how much more will Merlin be paid than the other managers in the industry?

Reference no: EM13692495

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