Suppose That the Market for Candy Canes Operates Under Conditions

question 30

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. Now suppose that 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. Based on the information given, we can conclude that once all the adjustments to long-run equilibrium are achieved, the price of candy canes will equal:

• A) five cents.
• B) ten cents.
• C) fifteen cents
• D) It is impossible to answer without knowing exactly how many firms entered and/or left the industry.

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Definitions:

Significant Correlations

Statistical relationships between two variables where the association is strong enough to not likely be due to chance.

Constructs

Abstract concepts or theoretical entities that are devised to explain patterns in research, such as intelligence, motivation, or happiness, which are not directly observable.

Interrater Agreement

The level of consistency among different observers or raters in the assessment or evaluation of the same phenomenon.

Assessments

The evaluation or measurement of a particular process, concept, or characteristic, often used to determine progress, skill level, or understanding.