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4 December, 10:47

2). 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). $500.

D). $1200

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Answers (1)
  1. 4 December, 10:51
    0
    The correct answer is:

    $300 (B)

    Explanation:

    The value added on a product is the amount of profit made on the product, after the cost incurred have been deducted. In this case, the tanner bought the leather for $400, and then sells it for $700, therefore, the value added is calculated as:

    value added = selling price - cost price = 700 - 400 = $300.
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