At nick's bakery, the cost to make homemade chocolate cake is $3 per cake. as a result of selling three cakes, nick experiences a producer surplus in the amount of $19.50. nick must be selling his cakes for
Producer surplus is the difference between the amount a producer of a good receives and the minimum amount the producer is willing to accept for the good.
Cost to make 1 cake= $3
FIND SURPLUS PER CAKE Surplus divided by 3 cakes $19.50 ÷ 3= $6.50 surplus per cake
SALE PRICE OF CAKES $3 cost + $6.50 surplus= $9.50
