Question

Denea produces cookies. Her production cost is $3 per dozen. She sells the cookies for $8 per dozen. Her producer surplus is:

a) $5 per dozen
b) $8 per dozen
c) $3 per dozen
d) $11 per dozen

Answer 1

The producer surplus per dozen of cookies is $5.

Step-by-step explanation:

The producer surplus is the difference between the price at which a product is sold and the cost of producing it. In this case, Denea sells cookies for $8 per dozen but her production cost is $3 per dozen. The producer surplus per dozen of cookies is $8 - $3 = $5.