Kristi and Rebecca sell lemonade on the corner.It costs them 7 cents to make each cup.On a certain day,they sell 40 cups,and their producer surplus for that day amounts to $15.20.Kristi and Rebecca sold each cup for

Question

Quizplus · Accepted Answer

Producer surplus is the difference between what producers are willing to accept for a good and what they actually receive. Here, the cost to make each cup is 7 cents. If their total producer surplus is $15.20 for 40 cups, then the surplus per cup is $15.20 / 40 = $0.38. Adding this to the cost per cup (7 cents), the selling price per cup is 7 cents + 38 cents = 45 cents.

Kristi and Rebecca Sell Lemonade on the Corner