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