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e STEP: 2 of 3 The nation of Ectenia apple orchards, which sell apples at the world price of $2 per apple. The following equa
01=100-2w L=50-025W OL 1,000-2.5 ○ L=50-0.125W What is the markets labor demand? O L 1,000-2.5W L=50-0, 125W L= 1,000-5W O L
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Answer #1

Given,

Q = 100L-L2

MP, 100-2L

Price = $ 2

MRP, = P × MPL = 2 × (100-2L)

MRP. = 200-4L

At equilibrium MRPL must be set equal to MFCL

200 - 4L = w

4L = 200 - w

L = 50 -0.25W

Market Demand = (50 - 0.25W) *20

Market Demand = 1,000 - 5W

When Labour = 200

L = 1000 - 5 W

200 = 1000 - 5*W

5W = 800

W = 800/5 = $ 160

Individual firms hire, L = 50 - 0.25W

When w = 160

L = 50 - 0.25*160 = 50 - 40 = 10

Profit of each orchard = Total Revenue - Total Cost = PQ - TC

Profit = 2(100L-L2) - 160L = 2000 - 200 - 1600 = $ 200

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