At nick's bakery, the cost to make homemade chocolate cake is $4 per cake. as a result of selling five cakes, nick experiences a producer surplus in the amount of $17.50. nick must be selling his cakes for

The definition of producer surplus is the difference between what the producer receives and what would be the minimum willingness to accept for the item.

Minimum Willingness to Accept: $4 Per cake X 5 Cakes = $20

Producer Surplus = $17.50

$20+$17.50 = $37.50 Price 5 chocolate cakes are sold for

$37.50/5 = $7.50 per chocolate cake.