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. Based on the information given, we can conclude that the average total cost of producing candy canes:

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In long-run equilibrium, firms in a perfectly competitive market produce at the minimum point of their average total cost curve. Since the price of each candy cane is $0.10 and the market is in equilibrium, it must mean that the average total cost of producing candy canes is also $0.10, or else firms would be incentivized to either exit or enter the market in order to adjust to the equilibrium price.

Suppose That the Market for Candy Canes Operates Under Conditions