Suppose That the Market for Candy Canes Operates Under Conditions

question 256

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.Once all of the adjustments to long-run equilibrium have been made,the price of candy canes will equal:

• A)$0.05.
• B)$0.10.
• C)$0.15.
• D)The question is impossible to answer without knowing exactly how many firms entered and/or left the industry.

---

Definitions:

Periodic Bond Interest Payments

The regular interest payments made to bondholders during the life of the bond.

Present Value

The immediate value assigned to a future sum of money or cash movements, based on a particular return rate.

Interest Period

The duration over which interest is calculated on a loan or investment, which could be monthly, quarterly, semiannually, or annually.

Bond Indenture

A legal document specifying the terms, conditions, and details of a bond issued by a corporation or government entity.