Assume there are three hardware stores,each willing to sell one standard model hammer in a given time period.House Depot can offer this 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 was $13,then total producer surplus would be:
A) $9.
B) $30.
C) $17.
D) $7.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the market price and the minimum price each store is willing to accept. For House Depot, the surplus is $13 - $7 = $6. For Lace Hardware, it is $13 - $10 = $3. Bob's Hardware has no surplus as the market price equals their minimum price. Total producer surplus is $6 + $3 = $9.

Assume There Are Three Hardware Stores,each Willing to Sell One