Assume There Are Three Hardware Stores, Each Willing to Sell

question 25

Multiple Choice

Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers is $10, which of the following statements is true?

• A) Only House Depot would have positive surplus by supplying hammers to the market.
• B) Only House Depot and Lace Hardware would have positive surplus by supplying hammers to the market.
• C) House Depot, Lace Hardware, and Bob's Hardware would all supply hammers to the market, but Bob's would have negative surplus.
• D) Only House Depot and Bob's Hardware would supply hammers to the market.

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Definitions:

Book Values

The value of an asset as recorded on the balance sheet, calculated as the original cost of the asset minus accumulated depreciation.

Flotation Costs

Flotation Costs are costs incurred by a company when it issues new securities, including underwriting fees, legal fees, and registration fees.

Cumulative Preferred Stock

Cumulative preferred stock is a type of preferred share that accrues dividends in case they are not paid out in the year they are due, ensuring dividends are paid out before any are distributed to common shares.

Marginal Income Tax Rate

The proportion of tax levied on your earnings for every tax bracket you fall into.