Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot could offer a hammer for a minimum of $7. Lace Hardware could offer a hammer for a minimum of $10. Bob's Hardware could offer a hammer for a minimum of $13.If the market price of hammers is $13, what would total producer surplus be?
A) $9
B) $30
C) $17
D) $7

Question

Quizplus · Accepted Answer

Producer surplus is the difference between what producers are willing to accept and what they actually receive. House Depot has a surplus of $6 ($13 - $7), Lace Hardware has a surplus of $3 ($13 - $10), and Bob's Hardware has no surplus ($13 - $13). Total producer surplus is $6 + $3 + $0 = $9.

Assume There Are Three Hardware Stores, Each Willing to Sell