Huh? Of course it's important to know that. It helps her know whether the profit makes it a viable business. I just said that. My point was you left out an important part of the equation - what she can sell cake for in her market. Every time I come to this site, someone asks this question and someone else says, "figure all your costs and then you'll know what you should charge". That's only part of it.
What the market will bear is not something you can just forget about. If I can make a hamburger for $1 and everyone is selling them for $8, maybe I should make hamburgers. But I'm an idiot if I sell them for $2 based on the fact that I think I'm making double my money.