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12 August, 11:10

At nick's bakery, the cost to make homemade chocolate cake is $4 per cake. as a result of selling five cakes, nick experiences a producer surplus in the amount of $17.50. nick must be selling his cakes for

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  1. 12 August, 11:33
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    The definition of producer surplus is the difference between what the producer receives and what would be the minimum willingness to accept for the item.

    Minimum Willingness to Accept: $4 Per cake X 5 Cakes = $20

    Producer Surplus = $17.50

    $20+$17.50 = $37.50 Price 5 chocolate cakes are sold for

    $37.50/5 = $7.50 per chocolate cake.
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