A bakery produces loaves of bread at a marginal cost of $3 each. If they decide to sell these loaves at a market price of $5, what is the producer surplus per loaf sold?

Producer surplus is the extra money a producer keeps after covering the cost of making a product. It is found by subtracting the marginal cost from the selling price. Here the bakery’s marginal cost is $3 and they sell each loaf for $5. Subtracting gives $5 – $3 = $2. Therefore, the bakery earns a producer surplus of two dollars for each loaf sold.