Suppose That the Market for Candy Canes Operates Under Conditions

question 74

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 costs 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 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:

Depth Perception

The ability to perceive the distance of an object or the spatial relationship between objects, allowing us to move through the world safely and efficiently.

Light Originates

The initial source or generation of light, a form of electromagnetic radiation that enables visual perception.

Sound Waves

Vibrations that travel through air or another medium and can be heard when they reach an ear or a detecting device.

Amplitude

The magnitude or intensity of a fluctuating signal, measured from the average or rest position to the peak.