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The nation of Paradigm has 18 competitive apple orchards, which sell oranges at the

 The nation of Paradigm has 18 competitive apple orchards, which sell oranges at the world price of $3 per orange. The following equations describe the production function and the marginal product of labor in each orchard: = 100L - L^2 MPL = 100 – 2L a. What is each orchard's labor demand as a function of the daily wage W? What is the market's labor demand? b. Paradigm has 180 workers who supply their labor inelastically. Solve for the wage W. How many workers does each orchard hire? How much profit does each orchard owner make? c. Calculate what happens to the income of workers and orchard owners if the world price of oranges doubles to $6 per orange. (See part d below) d. Now suppose the price is back at $2 per orange, but a hurricane destroys half the orchards. Calculate how the hurricane affects the income of each worker and of each remaining orchard owner. What happens to the income of Paradigm as a whole?

Feb 01 2020 View more View Less

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