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

question 66

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 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:

Incentives

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Yerkes-Dodson Law

A theory suggesting that there is an optimal level of arousal for the best performance of a task: too little arousal can lead to insufficient motivation, whereas too much can impair performance.

Moderate Arousal

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