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:

1. Determine the selling price per dozen: $8
2. Determine the production cost per dozen: $6
3. 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.