III. Question and Answer (2 questions, 24 points) 1. Labor market (12 points) Ectenia has 20 competitive apple orchards, all of which sell apples at a domestic price of S1 per apple. The production function of each apple orchard is: q=100*1-F Where q is the number of apples produced in a single apple orchard, and 1 (lowercase L) is the number of workers used in a single apple orchard. (1) What is the labor demand curve P/W) of a single apple orchard as a function of wage W? What is the labor demand curve L"W) of the entire market? For the latter, draw a graph to represent it. (Note: For production function q=a*l-b*F, the marginal product MPL =-26L) (1 point) (2) Ectenia has 200 workers who offer their labor inelastically. Find the equilibrium wage and employment in the labor market. Draw a graph to represent it. (1 point) (3) In equilibrium, what is the total output of apples in Ectenia? What is the producer surplus (i.e.. profit, since there are no fixed costs) earned by all the orchard owners? (1 point) (4) Now Ectenia decide to open up to the world market. Apples are priced at $2 each on the world market. How does the workers' wage change? How does the total profit of the apple orchard owners change? Draw a graph or calculate. Do workers in Ectenia benefit or suffer from the opening of the apple market? What about the orchard owners? Does anyone else in Ectenia benefit or suffer from this opening up? (3 points) (5) Now assume that the world price of apples is still S2. A hurricane destroys half of apple orchards, and workers have to move to jobs in apple orchards that are not destroyed by the hurricane. How does workers' wage change? Do workers as a whole benefit or suffer from the hurricane? What happens to the total profit of the apple orchard owners who are not destroyed? Do they benefit or suffer from the hurricane? Do all apple orchards as a whole (destroyed and non-destroyed) benefit or suffer from the hurricane? How much does Ectenia's apple export decrease? All questions are answered by calculation or graph. (3 points) (6) Now assume that the world price of apples is still $2 and there is no hurricane. Immigration adds 200 workers to Ectenia's workforce, offering their labor inelastically. How does workers' wage change? Do native workers benefit or suffer from immigration? Will apple orchard owners benefit or suffer? Do domestic workers and apple orchard owners benefit or suffer as a whole? All