Answer:
The price of candy canes, in the long run, will be $0.15.
Explanation:
The price of the candy cane is $0.10.
The firm is in the long-run equilibrium so the price will be equal to marginal cost and average total cost.
Now, with the increase in sugar prices, the ATC will increase to $0.15.
This will cause losses to some of the firms.
In the long run, the loss incurring firms will exit the market. As a result, the market supply will decline. This consequently leads to an increase in the price to $0.15 where ATC is being covered.
Answer:
The price of candy canes, in the long run, will be $0.15.
Explanation:
The price of the candy cane is $0.10.
The firm is in the long-run equilibrium so the price will be equal to marginal cost and average total cost.
Now, with the increase in sugar prices, the ATC will increase to $0.15.
This will cause losses to some of the firms.
In the long run, the loss incurring firms will exit the market. As a result, the market supply will decline. This consequently leads to an increase in the price to $0.15 where ATC is being covered.
In the long-run equilibrium price will be equal to ATC. So, the price of candy canes will be $0.15.
