Suppose That the Market for Candy Canes Operates Under Conditions

question 151

Essay

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 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 nor exit from the industry.

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Definitions:

Stimulus Generalization

The psychological phenomenon where a response conditioned to one stimulus is elicited by similar, but not identical, stimuli.

Conditioned Stimulus

A previously neutral stimulus that, after association with an unconditioned stimulus, triggers a conditioned response.

Electric Can Opener

A kitchen appliance designed to remove the lid from a metal can by using an electric motor to power a cutting mechanism.

Cat Food

Nutritional feed specifically formulated to meet the dietary requirements of cats.