Counterfeit Bill
The Counterfeit Bill problem (Sobel and Maletsky 1999).
A customer enters a store and purchases a pair of slippers for $5, paying for the purchase with a $20 bill. The merchant, unable to make change, asks the grocer next door to change the bill. The merchant then gives the customer the slippers and $15 change.
After the customer leaves, the grocer discovers that the $20 bill is counterfeit and demands that the shoe-store owner make good for it. The shoe-store owner does so, and by law is obligated to turn the counterfeit bill over to the FBI.
How much does the shoe-store owner lose in this transaction?
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