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 $0.20. Now suppose that the price of sugar falls, decreasing the marginal and average total costs of producing candy canes by $0.15. Based on the information given, we can conclude that in the short run a typical producer of candy canes will be making:

Positive economic profit

Explanation: In the economic profit, we have to consider the revenue earned and the cost of production including the opportunity cost. In the scenario above, the economic profit is positive, because, the average and marginal cost falls by $0.15 at a time when the sales price of the product is $0.20. The economic profit here is positive, due to the further reduction in the marginal and average price of an important material in the production process. In this scenario, due to positive economic profit, the New firms are attracted to the market.

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi