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Please Explain. Product X is produced by two factors of production, A and B. These factors must be used in xed proportions according to the

Please Explain.

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Product X is produced by two factors of production, A and B. These factors must be used in xed proportions according to the recipe 1A + 13 produces 1X. The industry is competitive. Factor A has no use outside the industry, while factor B is so widely used outside the industry that the price of a unit of B is not inuenced by variations in output in the X industry. The price of B is $14. There are 2000 units of factor A. Each of them will work only if it is compensated at least $1 per hour. The demand curve of product X is XPx = $2000. Only integral quantities of X may be produced. If industry X is competitive, what is the price of a unit of A in equilibrium? a. $1 b. $4 c. $5 d. $2000 e. None of the above

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