Question

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 increased from $7 to $11 : both Bob's Hardware and Lace Hardware would lose surplus. only Bob's Hardware would still lose surplus. House Depot is the only producer that will gain surplus. producer participation in the market would increase.

Answer 1

If the market price of hammers increased from $7 to $11, only Bob's Hardware would still lose surplus.

Step-by-step explanation:

In this scenario, if the market price of hammers increased from $7 to $11, only Bob's Hardware would still lose surplus. Both House Depot and Lace Hardware would still be able to generate surplus as they can offer the hammer at a lower cost than the market price. Bob's Hardware, being an independent hardware store, has a higher minimum price and would lose surplus if the market price increased.