Vendor’s loss

Question:

A customer buys a widget from a vendor for $3. The customer gives the vendor a $10 bill. The vendor does not usually deal with cash, so he goes to the business next door to get change. The vendor then gives the customer the widget and $7 in change. After the customer leaves, the business next door determines that the $10 bill is counterfeit. Embarrassed, the vendor gives the neighboring business a genuine $10 bill from his wallet. How much value has the vendor lost in the transaction?

.

.

C

A

P

T

A

I

N

I

N

T

E

R

V

I

E

W

.

.

Solution: There is only one relevant transaction. The salient feature of this transaction is that in exchange for a worthless piece of paper, the vendor gave up $7 plus the widget. The $3 change that the vendor received is the only thing of value he gets to keep.

Answer: $7 plus the widget.

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