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.

---

Definitions:

Perfectly Inelastic

A situation where demand or supply does not change in response to a change in price.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good that consumers are willing and able to purchase at different prices.

Price Elasticity

The measure of how much the quantity demanded or supplied of a good changes in response to a change in its price. It reflects the sensitivity of consumers or producers to price changes.

Unit Price Elastic

A situation in which the percentage change in quantity demanded is equal to the percentage change in price, resulting in no change in total revenue.