In last week's column I made the point that many Americans, both adults and kids, would have a tough time explaining the economic system that makes our country tick.

As if to prove my point, a few days later I saw a poll in which nearly 60% of those interviewed favored a price cap on gasoline. That would be an economic disaster, bringing a return of the shortages and gas lines we experienced in the 1970s.

Yet despite what people might tell pollsters, it's my contention that all you have to do is scratch the surface of the average American and you'll find an itchy capitalist.

I reached that conclusion a number of years ago, when my children attended a small co-op preschool. For several years, demand for slots at the school had exceeded supply. One year, however, a day-care center opened down the road and siphoned off customers. As a result of lower-than-expected revenues from tuition, the school faced a $300 deficit.

To close the budget gap, we parents decided to hold a bake sale, which had a number of advantages: a product everyone was familiar with, ease of entry into the market (we could set up shop in front of Sears) and no need for outside financing because we parents would invest the cost of labor and materials.

The goal, of course, was to maximize profits -- or, as our bake-sale organizer put it, "the more we bake, the more we make." But we also had to determine the market-clearing price of brownies and angel food cake.

I rejected the cost-plus approach to pricing my own nut-roll pastries (a holiday recipe handed down from my grandmother). How could I put a price on Grandma's R&D? Instead, I opted for market-based pricing: I called my mother in Pennsylvania and asked how much nut rolls fetch there. Allowing for the higher cost of living in Washington, D.C., where I live, I tacked on 50 cents per roll.

We got our price. We also did a brisk business in chocolate-and-cream-cheese concoctions called black-bottom cupcakes. We rotated our stock, ran specials on slow-moving items, and after four hours liquidated what little remained of our inventory with a special closeout sale. The black-bottom line: a profit of $263.50.

And that's the economy in a nut roll.

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