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 versus what they actually receive. Here, the cost to make each cup is 7 cents, and the total producer surplus is $15.20 for 40 cups. The surplus per cup is $15.20 / 40 = $0.38. Adding this to the cost per cup gives $0.07 + $0.38 = $0.45, so they sold each cup for 45 cents.

Kristi and Rebecca Sell Lemonade on the Corner