In Shoetown,a Rancher Takes $0 Worth of Inputs and Produces

question 27

Multiple Choice

In Shoetown,a rancher takes $0 worth of inputs and produces animal skins,which he sells to the tanner for $400.The tanner then sells leather to the shoemaker for $700,and the shoemaker then sells $1200 worth of shoes.The value added by the tanner is

• A)$0.
• B)$300.
• C)$400.
• D)$500.
• E)$1200.

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Definitions:

Common Values

Refers to a situation in auctions or market settings where a particular item has the same value to all bidders or participants.

Profit-Maximizing

An economic principle where a firm's goal is to achieve the highest possible profit given its production costs and market conditions.

Private-Values

The individual valuation of an item or asset that varies from person to person, usually in the context of auctions or bidding scenarios.

Vickrey Auction

A type of sealed-bid auction where bidders submit written bids without knowing the bid of the other people in the auction and the highest bidder wins, but the price paid is the second-highest bid.