Assume There Are Three Hardware Stores,each Willing to Sell One

question 85

Multiple Choice

Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer their hammer for a minimum of $7.Lace Hardware can offer the hammer for a minimum of $10.Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described,if the market price of hammers decreased from $13 to $11:

• A) total producer surplus would decrease from $9 to $5.
• B) total producer surplus would increase from $5 to $9.
• C) total producer surplus would decrease from $30 to $17.
• D) total producer surplus would remain unchanged.

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Definitions:

Market Price

The price of a commodity when sold in a given market, reflecting supply and demand dynamics.

Profit-Maximizing

The process or strategy of setting prices or production levels to achieve the highest possible profit.

ATC

Average Total Cost, calculated by dividing total cost by the quantity of output produced.

Profit-Maximizing

A strategy or level of production where a firm makes the highest possible profit.