Suppose That the Market for Candy Canes Operates Under Conditions

question 114

Multiple Choice

Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run equilibrium, and that the price of each candy cane is $0.10. Based on the information given, we can conclude that the average revenue for candy canes:

• A) is less than $0.10.
• B) equals $0.10.
• C) is greater than $0.10.
• D) It is not possible to answer based on the information given.

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Definitions:

Marginal Revenue

The additional income received from selling one more unit of a good or service; it is an important concept in determining optimal output levels.

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Output

The total amount of goods and services produced by an economy, company, or industry within a specific period.

Long-Run Supply Curve

A graphical representation showing the relationship between price and the quantity supplied that firms are willing to produce, given all inputs are variable.