Question

Determine which of the statements are examples of market transactions and which are not. Identify statements describing market transactions as "market"; otherwise label the statement "not market."
1. Frank takes care of his elderly aunt while she recovers from knee replacement surgery.
2. Jack and Diane buy tickets to the sold out Pirates game from a ticket scalper.
3. Jess gets a soda from the vending machine on her afternoon break.
4. The citizens of Marble Cliff, Vermont, get financial relief from the government after a flood destroyed all of their homes.
5. Suzanne gets a used textbook on eBay for much less than its list price at her university's bookstore.
6. Norm paints the fence in his front yard on his day off work.
7. Mitchell buys 50 shares of General Motors stock at the going price per share.

Answer 1

Answer:

Market transactions are those in which the buyer and seller act in their own self interest.

In not market transaction they are not performed at an arms length and buyer and seller of services do not act on their self interest.

1. Frank takes care of his elderly aunt while she recovers from knee replacement surgery. (not market)

Reason: Non marketed transactions are not at arm's length and not in the self interest of the buyer and seller combine.

2. Jack and Diane buy tickets to the sold out Pirates game from a ticket scalper. (not market)

Reason: The transaction is in the self interest of both buyer and seller but it is an illegal transaction done by ticket scalper to take advantage of the old out factor of the show.

4. The citizens of Marble Cliff, Vermont, get financial relief from the government after a flood destroyed all of their homes. (not market)

Reason: The loss compensation by the government is an intervention in the market to help citizens and not an arms length transaction between buyer and seller.

5. Suzanne gets a used textbook on eBay for much less than its list price at her university's bookstore.(market)

Reason: Ebay is a platform that provides services to connect buyer and seller to sell goods. The transaction is in the self interest of both buyer and seller

6. Norm paints the fence in his front yard on his day off work.(not market)

Reason: non marketed services are not part of the market transactions.

7.Mitchell buys 50 shares of General Motors stock at the going price per share (market)

Reason: Going price is the current market price of the transaction hence it is performed at an arms length in both the interest of the buyer and seller.