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 once all of the adjustments to long-run equilibrium have been made, the price of candy canes will equal:
Select one:
A. $0.10.
B. $0.15.
C. The question is impossible to answer without knowing exactly how many firms entered and/or left the industry.
D. $0.05.
B. $0.15.
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Indicate whether the statement is true or false
A legal maximum on the price at which a good can be sold is called a price
a. floor. b. subsidy. c. support. d. ceiling.
The marginal product of an input in the production process is the increase in
a. total revenue obtained from an additional unit of that input. b. profit obtained from an additional unit of that input. c. total revenue obtained from an additional unit of that input. d. quantity of output obtained from an additional unit of that input.
An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the most of each type that can be produced per day if each worker fully specializes according to his/her comparative advantage?
A. 5 TVs and 12 radios B. 4 TVs and 10 radios C. 2 TVs and 6 radios D. 3 TVs and 8 radios