Asked by
Ebony Hawes
on Oct 27, 2024Verified
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.
Long-Run Equilibrium
A market state where all producers and consumers have fully adjusted to all changes, and there are no forces causing further adjustments.
- Describe how changes in market conditions lead to adjustments in supply and demand in the long run.
Verified Answer
RK
Learning Objectives
- Describe how changes in market conditions lead to adjustments in supply and demand in the long run.
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