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 from these transactions is

Question

Quizplus · Accepted Answer

The value added is the sum of the differences between sales and purchases at each stage: Rancher ($400 - $0 = $400), Tanner ($700 - $400 = $300), Shoemaker ($1200 - $700 = $500). Total value added = $400 + $300 + $500 = $1200.

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