re: Settle This Facebook Math Problem

you made $11.

quote:

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I have a Dollar. I buy a toy.

I sell toy for $11. I made $10.

I buy toy for $10, I sell for $21. Are you saying I did not make $20??

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No, you made $21 (assuming you spent your entire dollar buying the first toy).

$1 + $10 = $11 total spent
$11 + $21 = $32 total income

$32-$11=$21 profit.

Show me where I'm wrong? Specifically?

Lay out your exact problem like I did.

Use an equation to show me I'm wrong.

In the alternative show me where this is wrong:
Beginning balance (line value:0)[net problem value:0]
-
First horse purchase (60)[-60]
+
First horse sale (70)[+10]
+
Loan (10)[+20]
-
Second horse purchase (80)[-60]
+
Second horse sale (90)[+30]
-
Repayment of loan (10)[+20]
=
20

quote:

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Show me where I'm wrong?

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You're wrong for continually arguing (like several of us have), while pioneer is trolling.

(no message)

Thank you for admitting I was right

He buys for 60 but sells for 70: +10
He sold for 70 but then buys back for 80: -10
He bought for 80 but then sells for 90: +10

If you add those up you get only a profit of $10.

Or a more natural way the thought process might happen "He bought for 60 and sold for 70 so he is up 10. But oh no, he bought it back for 80, that's a $10 loss so he's back to 0 profit. He sold it again for 90, that's $10 profit on his 80 buy so he's 10 up again!"

Thinking of transactions in pairs like this is how you get profits from reselling an item or rebuying something you sold. So it's a very intuitive and automatic way to think of these transactions. Of course what they've ended up doing is double counting the 2 middle transaction, treating it as 6 transactions when really it's 4.?

quote:

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But oh no, he bought it back for 80, that's a $10 loss

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It's not. You can't buy something for 80 using 70. It is a 10 loss, but he had to add 10 in in order to get to 80.

That's the problem with your equation and your line of thinking. It doesn't matter if it's the same horse or a different horse, you can't buy something for 80 using 70. You have to add an additional 10 in there which cancels out the perceived loss.

Forget the entire problem and answer me this question:

Imagine his atm card transactions for that day:

Starting balance:0
Withdraw $60
Deposit $70
Withdraw $80
Deposit $90

Ending balance=20

That's a net gain of $20. His bank account has risen by $20. How can you say that although his account has risen by $20 he only made $10?