Assume There Are Three Hardware Stores, Each Willing to Sell

question 51

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 increased from $6 to $8:

• A) producer participation in the market would increase.
• B) producer participation in the market would decrease.
• C) producer participation in the market would remain unchanged.
• D) total producer surplus would increase by $2.

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Definitions:

Life Estate

An ownership interest in which the holder has the right to possess the property until her or his death.

Eminent Domain

The right of a government or its agent to expropriate private property for public use, with payment of compensation.

Trade Secret

Confidential business information that provides a competitive edge and is subject to efforts to maintain its secrecy.

State Official

An individual who holds an office or position of authority in the government of a state.