Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers decreased from $15 to $10:
A) total producer surplus falls by $5.
B) producer surplus for each producer falls by $5.
C) Bob's Hardware no longer sells hammers.
D) total producer surplus falls by $15.
Correct Answer:
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