No you are wrong because we must assume the fact that he has a store means that his store is viable, meaning that from my example your argument would be that your built widget would only be a loss of 30 because "what if he cannot sell it"
CaseyH You're making things too complicated...... As I've said, the correct answer was in Wang Meng's original article. As Big Yao said such quiz is for 10-years-old girls in China. Do you think the opportunity cost concept is already too difficult for 10-years-olds to grasp?? Or in USA, the concept of opportunity costs is already taught to 10-years-old?
The question is asking how much he lost. That should be understood to be the exact opposite of money earned (one is the negation of the other). And since we calculate money earned relative to the costs (not selling price) of the product, doesn't it make sense to use the same baseline for money lost?
Here's my attempt at breaking it down: Say the guy starts with exactly $100 in the drawer, in the form of two $50 bills $50 $50 Then the conman gives him a fake 50. He takes it next door and trades it for 2 $20 bills, a $5 bill, and 5 $1s. $50 $50 $20 $20 $5 $1 $1 $1 $1 $1 That's what he has in his drawer when he has to give the conman his $29 in change, which eleminates a $20 bill, a $5 bill, and 4 $1 bills. $50 $50 $20 $1 That's what's left in the drawer when the neighbor comes back with the fake $50 bill. So the shoe salesman gives him one of his two $50 bills, and is left with this in the drawer: $50 $20 $1 Which is $29 short of his starting till (two $50 bills). Then he buys a replacement pair of shoes for the one that was conned away, so he's out another $15. $29 + $15 $44.
Ok, I hope this is to end all the confusions so we can refocus on Rox. Mike made a shoe trade involving 1. selling a pair of shoes to the buyer, 2. exchanged the money with his neighbor. The money out: $50 to the buyer, $50 to the neighbor. Total: 100 The money in: $6 as profit, $50 from the neighbor. Total: 56 Therefore, Mike lost 100-56= $ 44 In this case, all activities involving the shoes were counted as one trade, just forget about the cheating or something. We also don't need to worry about the profit. The more the profit, the less the loss. You can calculate it by yourself.
As many have figured out by now, the answer is clearly $44 or $50. The easiest way to think about this is to forget about the actual sequence of events and just look at pairs of individuals and the transactions involved between them. ------------------------------------------- There were 2 transactions between Mike and his neighbor. Transaction 1 - his neighbor gave him a real $50 in change for a fake $50. Transaction 2 - later Mike gives the neighbor a real $50. The resulting balance of the transactions between Mike and his neighbor is $0. Each gave the other a real $50 out of their own pocket at different points in time. ------------------------------------------- There were also 2 transactions between the customer and Mike. Transaction 1 - customer gave Mike a fake $50. Transaction 2 - Mike gave the customer a real $29 in change and a pair of shoes ($15). The resulting balance of the transactions is -$29 (change) + -$15 (shoes) = -$44 or a loss of $44 for Mike. ------------------------------------------- The only valid debate I have heard is whether or not Mike lost an additional $6 of opportunity cost because he was unable to yield real profit from selling that pair of shoes. I say no but not because you can not include opportunity cost. Whether or not you include opportunity cost is a subjective question based on the original posted question: How much money did Mike lose? How you interpret the word "lose" is the reader's choice. If you do choose to consider opportunity cost, then you still can not consider it a loss if the store owner does not manufacture his own shoes and that customer was never going to pay for the shoes with real money if he was unsuccesful at thieving them. Assuming the store owner is strictly a retailer, then he can easily replace the lost shoes with a new pair from the manufacturer and yield profit on the replacement pair. This also assumes that customer demand for the shoes does not outweight manufacturer supply by 1 pair of shoes. In this scenario, the owner yields profit on the replacement shoes and recovers the lost $6 of potential profit on the stolen shoes. Even if the owner would have never been able to sell the shoes that were originally stolen, then you would not have considered the stolen shoes to be lost profit. Either way, the owner still loses $44. Even this logic requires some assumptions so as a few people have pointed out, the original question was not well enough constructed to yield only 1 correct answer.
I would also sarcastically like to point out that I am not Asian. For those that claimed they were Asian and seemed to imply that they were good at math for that reason, I can think of a few other ridiculous stereotypes about Asian people. One of them definitely doesn't reflect well on the ladies if you know what I mean . I wonder if they would stake claim to those stereotypes as well or just pick and choose the ego-boosting ones.
Correct. If Mike sold 1,000 pairs of shoes in a day, he wouldn't say, "Well there's another day where I didn't make any money."
Let me fix that for you. The $6 profit of that pair of shoes had already been realized. If not, the net loss of Mike will be exactly $50, the $50 he gave to the neighbor to take the fake $50 dollar bill back. The fake $50 dollar bill is just a red herring in the whole situation, because it is fake and it has no value.
The answer is 44. Transactions: First, >>> means give, <<< means take. 1. The owner >>>15A(shoes)>>> cheater Status -15$ +15$ 2. The owner <<<fake 50 bill<<<cheater Status -15$ +15$ since a fake 50 dollar bill worths 0$, status for both sides unchanged 3. The owner<<<50 real money<<<Neighbor Status +35$ -50$ since the neighbor got a fake bill for 50$ of real cash, he loses 50$ since the owner got 50 dollars for a piece of paper, he made 50 dollars,combined with his 15 dollars of loss, he has a net gain of 35$ 4. The owner>>>29 of change>>>cheater Status +6 +44 After giving 29 dollars of chnage to the cheater, the net gain of 35 dwindles to 6 dollars. 5. The owner>>>50 real money>>>> Neighbor Status -44 0 Giving the neighbor 50 dollars back means the owner now loses a total of 44$. The correct answer is 44 dollars of loss out of the owners pocket. I don't count the 6 dollars profit because it can NEVER come out of the owner's pocket. The owner never made 6 dollars in the first place, he gave away the shoes away for free plus 29 dollars.
Transactions: First, >>> means give, <<< means take. 1. The owner >>>$15(shoes)>>> cheater Status -$15 ........................+$15 2. The owner <<<50 fake bill<<<cheater Status -$15..........................+$15 since a fake 50 dollar bill worths 0$, status for both sides unchanged 3. The owner<<<50 real money<<<neighbor Status +$35...............................-$50 since the neighbor got a fake bill for $50 of real cash, he loses $50 since the owner got 50 dollars for a piece of paper, he made 50 dollars,combined with his 15 dollars of loss, he has a net gain of $35 4. The owner>>>29 of change>>>cheater Status +$6..................................+$44 After giving 29 dollars of chnage to the cheater, the owner's net gain of $35 dwindles to 6 dollars. 5. The owner>>>50 real money>>>> Neighbor Status -44......................................0 Giving the neighbor 50 dollars back means the owner now loses a total of 44$. The correct answer is 44 dollars of loss out of the owners pocket. I don't count the 6 dollars profit because it can NEVER come out of the owner's pocket. The owner never made 6 dollars in the first place, he gave away the shoes away for free plus 29 dollars.
Man....flawed logic...the pair of shoes was not given away for free. The customer gave Mike $ 50 in exchange for a pair of shoes priced at $21 (cost at $15) and $ 29 in changes, right? The $50 dollar bill just turned out to be a fake one. So Mike had to return a real $50 to exchange it back from his neighbor. If that $6 was not considered realized profit then the loss of Mike was that $50 he paid out to his neighbor.....and your answer of loss of $44 could not stand.
Let me fix that for you, Pruyen. Those $6 you refer to were not profit because they did not come from someone else's pocket. He actually just lost $6 less (the markup amount that you are alluding to) by giving the customer $29 in change instead of $35. I already assumed that markup as a reduction in the amount that he lost during the theft. Think of it as if the thief stole a pair of shoes and $29 in cash out of the register. After the thief is gone and wearing his brand new stolen shoes, the store owner is out $44 ($29 in cash + the $15 he paid the supplier for the shoes) AND he now has 1 less pair of shoes to sell that would have earned him $6 of profit (the markup amount that I am alluding to). That $6 would be lost potential profit if he had no replacement for those shoes. -$44 (total theft value) + -$6 (potential profit lost by having 1 less pair of shoes to sell after the theft) = -$50 However, my previous post assumed that he is a retailer and can easily replace the stolen shoes with another pair provided by the supplier and make the $6 off that replacement. If the supplier did not have another pair to give him and we assume that the store owner would sell off his entire inventory in either case, then he would, in fact, lose $6 of potential profit. If you, as the reader, choose to interpret the original question as including lost potential profit, and the store owner could not replace the shoes, then he did in fact lose a total of $50 by virtue of losing a pair of shoes to sell with the $6 markup.
Nah, don't get over complicated. The catch is PRICE is not REAL MONEY, therefore, price is not NOT PROFIT because it's not real money. The price of 21 dollars is just a number that is used to decide how much change he must give the cheater, he didn't actually receive 21 dollars of real money from the cheater. He gave the cheater a pair of shoes with a cost of 15 dollars and 29 dollars of change. Think about this, the owner got hosed, there was no business transaction at all, there was no deal. The whole thing is a scam. To talk about loss in profit in a scam is meaningless, he lost a pair of shoes that he paid for 15 dollars and 29 dollars of change. That's it. Also, I don't think it's good to involve the opportunity cost in this case, because the days it take to sell the shoes without the scam happening is indefinite, it could be 5 days or 3 months... which changes the cost of shoes as a result of more storage, labor, and utilities.. which in turn make the problem at hand impossible to calculate.
I can not believe how you guys are so worked up over this haha....especially the guy that swore $100 was the correct answer.
I have to agree that we are acting like there is a prize for all this wasted effort. Maybe Yao will give me a gold star or a smiley face sticker?? Ok, maybe not. How about kicking some Toronto ass? That would work just fine for me.
