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:
Select one:
A. neither entry nor exit from the industry.
B. firms leaving the industry.
C. firms entering the industry.
D. some firms entering and some firms leaving.
B. firms leaving the industry.
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The situation in which a firm charges different prices for different blocks of output is referred to as:
A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) fourth-degree price discrimination.
When would a rise in labor's marginal productivity lead to a leftward shift in workers' labor supply curve?
a. When workers are employed by a monopsony. b. When workers earn more nonlabor income from their capital. c. When workers engage in intertemporal substitution. d. When workers reduce their investment in human capital.
The price elasticity of demand for a good measures the responsiveness of:
A. price to a 1 percent change in the quantity demanded of that good. B. price to a 1 percent change in the demand for that good. C. quantity demanded to a 1 percent change in price of that good. D. demand to a 1 percent change in price of that good.
If inflation expectations change, a contractionary fiscal policy causes
A. the long-run Phillips curve to shift. B. the short-run Phillips curve to shift. C. a movement along the short-run Phillips curve. D. the short-run Phillips curve to remain constant.