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

question 7

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 $7 to $11:

• A) more producers would participate in the market.
• B) only Bob's Hardware would lose surplus.
• C) both Bob's Hardware and Lace Hardware would lose surplus.
• D) House Depot is the only producer that will gain surplus.

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Definitions:

Acid-test Ratio

A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory.

Quick Assets

Assets that can be quickly converted into cash without a significant loss in value, including cash, marketable securities, and accounts receivable.

Current Liabilities

Obligations or debts that a company must pay within one year or within its operating cycle if longer.

Gross Margin Ratio

A financial ratio that measures a company's financial health, calculated by subtracting the cost of goods sold from net sales and dividing by net sales.