In the nation of Utopia, there are four iron ore mines (IM1, IM2, IM3 and...
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In the nation of Utopia, there are four iron ore mines (IM1, IM2, IM3 and IM4) that supply iron ores to steel mills. Steel mills take iron ores as raw materials and produce steel. There are only three steel mills (SM1, SM2 and SM3) in the country while there are two buyers of the steel (B1 and B2) one is an automotive maker and the other is a construction material producer. Each mine can transact with at most one steel mill, and vice versa. Similarly, each steel buyer can transact with at most one steel mill, and vice versa. Each mine has an opportunity cost of $25 per ton of iron ore. Each steel buyer (automotive maker and the construction material producer) has a willingness-to pay of $200/ ton for the steel of the first steel mill(SM1) , and a willingness-to-pay of $250/ton for the product of the second and third steel mills (SM2 and SM3) because the quality of the steel produced by the latter two is superior. Assume that, iron ore mines, steel mills and the buyers of steel do not have any outside options such as sourcing from abroad or exporting to abroad. What is the Added Value of IM3 given setup?
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