Suppose That the Market for Candy Canes Operates Under Conditions

question 227

Multiple Choice

Suppose that the market for candy canes operates under conditions of perfect competition,that it is initially in long-run equilibrium,that the price of each candy cane is $0.10,and that the market demand curve is downward sloping.The price of sugar rises,increasing the marginal and average total cost of producing candy canes by $0.05;there are no other changes in production costs.In the long run,we will observe:

• A)firms leaving the industry.
• B)firms entering the industry.
• C)some firms entering and some firms leaving.
• D)neither entry to nor exit from the industry.

---

Definitions:

Statement of Cash Flows

A financial overview showing the cumulative cash inflows from a company's daily operations and investment receipts, against the total cash outlays for operational and investment expenditures during a nominated period.

Financing Activity

Transactions between a business and its financiers, such as issuing stock, paying dividends, or borrowing from lenders, reflecting the flow of cash used to fund the company's operations and expansions.

Manufacturing Equipment

The machinery and tools used in the process of producing goods, often considered a capital expense by companies.

Operating Activities

These refer to the primary revenue-generating activities of a business, such as sales of goods or services, and related expenses.