How to Calculate Producer Surplus per Dozen Cookies
Understanding Producer Surplus
Producer surplus is the difference between the price at which producers are willing to sell a good or service and the price they actually receive. It represents the benefit that producers receive from selling a product above their production cost.
Calculating Ivana's Producer Surplus
To calculate Ivana's producer surplus per dozen cookies, we follow these steps:
- Determine the selling price per dozen: $8
- Determine the production cost per dozen: $6
- Calculate the producer surplus by subtracting the production cost from the selling price.
Producer Surplus = Selling Price - Production Cost
Let's apply the given values:
Producer Surplus = $8 - $6
Producer Surplus = $2
Therefore, Ivana's producer surplus per dozen cookies is $2.