Economics (McConnell), 18th Edition

Chapter 2: The Market System and the Circular Flow

Web-based Questions

1
DIAMONDS—INTERESTED IN BUYING ONE? Go to the Internet auction site eBay at www.ebay.com and select the category Jewelry and Watches, followed by Loose Diamonds and Gemstones, and then Diamonds, Natural. How many natural diamonds are for sale at the moment? Note the wide array of sizes and prices of the diamonds. In what sense is there competition among the sellers in this market? How does that competition influence prices? In what sense is there competition among buyers? How does that competition influence prices?
2
BARTER AND THE IRS Bartering occurs when goods or services are exchanged without the exchange of money. For some, barter's popularity is that it enables them to avoid paying taxes to the government. How might such avoidance occur? Does the Internal Revenue Service (IRS), www.irs.ustreas.gov treat barter as taxable or nontaxable income? (Type "bartering income" in the site's search tool.) How is the value of a barter transaction determined? What are some IRS barter examples? What does the IRS require of the members of so-called barter exchanges?
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