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.