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 increased from $6 to $7:
A. total producer surplus would decrease.
B. total producer surplus would increase.
C. total producer surplus would remain unchanged.
D. total producer surplus cannot be determined with the information given.
Answer: C
You might also like to view...
Ball's research on disinflation across different countries found that
A) costs of disinflation were smaller for rapid disinflation than for gradual disinflation. B) costs of disinflation were larger for rapid disinflation than for gradual disinflation. C) costs of disinflation were about the same for both rapid and gradual disinflation. D) costs of disinflation were smaller when the central bank had a strong inflation-fighting reputation.
If the short-run Phillips curve has a very steep slope, the
a. structural deficit will grow during inflation. b. structural deficit will fall during recession. c. inflation costs of reducing unemployment are relatively low. d. inflation costs of reducing unemployment are relatively high.