Producer Surplus Calculation for Ivana's Cookies

What is Ivana's producer surplus per dozen cookies?

a. $6

b. $8

c. $14

d. $2

Answer:

Ivana's producer surplus per dozen cookies is $2.

Producer surplus is a measure of market efficiency and total economic surplus. In Ivana's case, she produces cookies at a cost of $6 per dozen and sells them for $8 per dozen, resulting in a producer surplus of $2 per dozen of cookies.

In business and economics, producer surplus represents the benefit a producer receives from selling a good at a market price higher than their production cost. It is an essential measure to understand market efficiency.

To calculate Ivana's producer surplus per dozen cookies, we subtract the production cost from the selling price: Producer Surplus = Selling Price - Production Cost. Substituting the given values, we get a producer surplus of $2 per dozen cookies for Ivana.