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 $8 to $12, producer surplus would increase:
A) from $8 to $12.
B) by $4 for each producer.
C) by $4 for House Depot.
D) by $7 in total.

Question

Quizplus · Accepted Answer

House Depot's producer surplus increases by $4 because the market price increased from $8 to $12, while their minimum price was $7.

Assume There Are Three Hardware Stores, Each Willing to Sell