Given the scenario described, if the market price of hammers increased from $6 to $7:
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.
A. total producer surplus would increase.
B. total producer surplus would remain unchanged.
C. total producer surplus would decrease.
D. total producer surplus cannot be determined with the information given.
B. total producer surplus would remain unchanged.
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What is larger: M1 or M2? Why?
What will be an ideal response?
A monopolistically competitive firm is like a perfectly competitive firm insofar as
A) both face perfectly elastic demand. B) both make an economic profit in the long run. C) both have MR curves that lie below their demand curves. D) both make zero economic profit in the long run.