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 $10, which of the following statements is true?
A) Only House Depot would have positive surplus by supplying hammers to the market.
B) Only House Depot and Lace Hardware would have positive 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 have negative surplus.
D) Only House Depot and Bob's Hardware would supply hammers to the market.

Question

Quizplus · Accepted Answer

Since the market price of hammers is $10, House Depot and Lace Hardware can supply hammers to the market and get a positive surplus. Bob's Hardware cannot supply hammers to the market at the minimum price of $13 and therefore will not have a positive surplus. So, only House Depot would have a positive surplus by supplying hammers to the market.

Assume There Are Three Hardware Stores, Each Willing to Sell