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

question 19

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 was $10,then:

• A) only House Depot would gain surplus by supplying hammers to the market.
• B) only House Depot and Lace Hardware would gain 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 lose surplus.
• D) only House Depot and Bob's Hardware would supply hammers to the market.

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Definitions:

Dividends Payable

A liability account on a company’s balance sheet indicating the amount owed to shareholders in the form of dividends to be paid out.

Stock Split

A corporate action that increases the number of a corporation's outstanding shares by dividing each share, which may lower the share price.

Par Value

The nominal or face value of a stock or bond, as stated in the corporate charter or on the certificate.

Stock Dividend

Stock Dividend involves distributing additional shares of a company's stock to its shareholders as a form of dividend.