Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their 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 decreased from $15 to $10:
A. Bob's Hardware no longer sells hammers.
B. producer surplus for each producer falls by $5.
C. total producer surplus falls by $15.
D. total producer surplus falls by $5.
Answer: A
You might also like to view...
________ shifts the consumption function upward
A) A decrease in the marginal propensity to consume B) An increase in the price level C) An increase in the real interest rate D) An increase in expected future disposable income E) An increase in disposable income
Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment
What price will the Busy Bee charge to maximize its profit? A) $5.00 for a hamburger B) $3.00 for a hamburger C) $2.00 for a hamburger D) $1.00 for a hamburger E) $4.00 for a hamburger
Could an increase in the demand for compact cars give an American automobile producer a comparative advantage in their production?
A) No, because comparative advantage depends entirely on productive capabilities. B) No, because changes in demand can only affect the price of compact cars. C) Yes, but only if it leads to a change in the techniques of production. D) Yes, by making compact-car production more profitable.
Consider the following statements:
a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives? A) a only B) b only C) c only D) a and b E) a, b, and c