From a quora question I replied a few days ago:
Imagine the following scenario: A man buys a toy for $4. He sells the toy for $6. He then buys the toy back for $8, and he sells the toy again for $10. In the end, how much money did the man make or lose? Or did he break even?
A typical multi-buy case… Ah..Let’s try to crack it down:
The straight-forward approach: The man spent (4+8=12) and earned (6+10=16). Thus, the man has as a balance= Earned$ - Spent$ = 16–12=4$. And he does not have the toy anymore.
The toy train approach: The toy was a toy train. The man stepped on it and fell and broke his left leg. His therapy cost is 100$ and he has 4$ profit from the transactions . Overall effect -96$.
The collector’s approach: The man googles the toys’ true market value and realizes it is a collectible that is worth 20$. So, he lost an additional profit of 10$ or he is exposed to -16$ balance in order to buy it back.
The regulated market hypothesis: The government breaks all toy black markets. The man buys the toy for 4$ and he is unable to resell it. End of story.
The gift approach: The man needs a last minute gift for his child and he buys back the toy for 14$. Man breaks even his initial purchase.
The defective toy hypothesis: The toy is defective and the man is forced to accept the return and give back the mone he received for the lasts transaction. Net effect -8$
Give me a home. Don’t let this man buy and sell me more times please…
The Consiglio Approach: The man sells the toy. A comet falls on the earth. Everyone Dies™.
The capitalist approach: The man continues buying and selling the same toy until he has 40$ in his pocket. Then he buys 10 identical toys for 4$ each and starts his own toy distributor company.
The socialist approach: No toys are purchased or bought. The government distributes toys to the children of each household based on their age.
The burglary approach: The man steals back the toy from the new owner. He has both 4$ from the transactions and the Spider-Man toy.
And last but not least, the genie approach: The man rubs the toy and a genie gets out of the toy train’s chimney. The man wishes to be able to sell the toy 4$ more. He is officially an idiot.
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