At Nick's Bakery,the cost to make homemade chocolate cake is $3 per cake.As a result of selling three cakes,Nick experiences a producer surplus in the amount of $19.50.Nick must be selling his cakes for
A) $6.50 each.
B) $7.50 each.
C) $9.50 each.
D) $10.50 each.

Question

Quizplus · Accepted Answer

To solve this problem, we need to use the concept of producer surplus, which is the difference between the price a seller receives and the cost to produce. In this case, we know that the cost to produce one chocolate cake is $3.

Let's assume that Nick sells each cake for $x. Then, his total revenue from selling three cakes is 3x.

From the problem statement, we know that Nick experiences a producer surplus of $19.50. This means that his total revenue exceeds his total cost of production by $19.50.

Using this information, we can set up an equation:

3x - 3(3) = 19.50

Simplifying, we get:

3x - 9 = 19.50

Adding 9 to both sides:

3x = 28.50

Dividing by 3:

x = 9.50

Therefore, Nick must be selling his cakes for $9.50 each to achieve a producer surplus of $19.50 after selling three cakes.

At Nick's Bakery,the Cost to Make Homemade Chocolate Cake Is