At Mike's Bakery, the cost of making one croissant is $1.50. If Mike sells 20 croissants and gains producer surplus of $40.00, then Mike must be selling his croissants for
A)$1.50 each.
B)$2.00 each.
C)$3.50 each.
D)$30.00 each.

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the selling price and the cost price. If Mike gains a producer surplus of $40 by selling 20 croissants, then the surplus per croissant is $40/20 = $2. Therefore, the selling price per croissant is $1.50 (cost) + $2 (surplus) = $3.50.

At Mike's Bakery, the Cost of Making One Croissant Is