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 increased from $6 to $8:
A) producer participation in the market would increase.
B) producer participation in the market would decrease.
C) producer participation in the market would remain unchanged.
D) total producer surplus would increase by $2.

Question

Quizplus · Accepted Answer

With the market price increasing from $6 to $8, House Depot, which could offer a hammer for a minimum of $7, would now participate in the market, increasing producer participation.

Assume There Are Three Hardware Stores, Each Willing to Sell