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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 costs of producing candy canes by $0.05. Based on the information given, we can conclude that in the short run a typical producer of candy canes will be making:

A) an economic profit.

B) zero economic profit.

C) negative economic profits.

D) The answer is impossible to determine based on the information given.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M960564

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