1. Pekan Nenas has 20 competitive pineapple orchards, all of which sell pineapples at the world price of RM2 per pineapple. The following equations describe the production function and the marginal product of labor in each orchard: where Q is the number of pineapples produced in a day, L is the number of workers, and MP, is the marginal product of labor. (a) (b) (c) Q = 100L-L² MPL = 100 - 2L, (d) What is each orchard's labor demand as a function of the daily wage W? What is the market's labor demand? Pekan Nenas has 200 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? Calculate what happens to the income of workers and orchard owners if the world price doubles to RM4 per pineapple. Now suppose that the price is back at RM2 per pineapple but a flood destroys half the orchards. Calculate how the flood affects the income of each worker and of each remaining orchard owner. What happens to the

1. Pekan Nenas has 20 competitive pineapple orchards, all of which sell pineapples at the world price of RM2 per pineapple. The following equations describe the production function and the marginal product of labor in each orchard: where Q is the number of pineapples produced in a day, L is the number of workers, and MP, is the marginal product of labor. (a) (b) (c) Q = 100L-L² MPL = 100 - 2L, (d) What is each orchard's labor demand as a function of the daily wage W? What is the market's labor demand? Pekan Nenas has 200 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? Calculate what happens to the income of workers and orchard owners if the world price doubles to RM4 per pineapple. Now suppose that the price is back at RM2 per pineapple but a flood destroys half the orchards. Calculate how the flood affects the income of each worker and of each remaining orchard owner. What happens to the

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1.
Pekan Nenas has 20 competitive pineapple orchards, all of which sell pineapples
at the world price of RM2 per pineapple. The following equations describe the
production function and the marginal product of labor in each orchard:
where Q is the number of pineapples produced in a day, L is the number of
workers, and MPL is the marginal product of labor.
(a)
(b)
(c)
Q = 100L - L²
MPL = 100 - 2L,
(d)
What is each orchard's labor demand as a function of the daily wage W?
What is the market's labor demand?
Pekan Nenas has 200 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?
Calculate what happens to the income of workers and orchard owners if
the world price doubles to RM4 per pineapple.
Now suppose that the price is back at RM2 per pineapple but a flood
destroys half the orchards. Calculate how the flood affects the income of
each worker and of each remaining orchard owner. What happens to the
income of Pekan Nenas as a whole?

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