Reading Comprehension

PT140 · S4 · P2 · Q12 Online Game Currencies

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Passage A is from a source published in 2004 and passage B is from a source published in 2007.

Topic

The real-world economic implications of virtual items and currency in multiplayer online games, and how they relate to taxation.

Framework

Present Debate (Passage B) / Highlight Noteworthy (Passage A)

Main Point

Passage A highlights how virtual economies in online games have real-world value and mimic economic systems. Passage B delves into the legal and policy debate about whether—and how—virtual wealth and transactions should be taxed, ultimately arguing for taxing only real-world cash exchanges, not in-game accumulation or trades.

P1 (A): Introduction to Multiplayer Online Games

Online games let players take on fantasy roles like warriors and quest together, creating a lively digital world where their avatars interact.

P2 (A): Discovery of In-Game Economies

An economist, Edward Castronova, discovered that these games feature complex economies where players generate and trade virtual goods, gaining wealth over time.

P3 (A): Player Auctions

Castronova noticed players sometimes sold their virtual items for real money in online auctions when they got tired of the game.

12.

Which one of the following most accurately describes the relationship between the two passages?

  1. Correct

    Passage A summarizes a scholar's

    Why this is right

    In Passage A, the economist Edward Castronova "noticed something curious" (P2), ... "things got even more interesting when he learned" (P3), ... "as he stared at the auction listings, he recognized with shock what he was looking at" (P4). It is a passage about these new online economies, as told through the eyes of Castronova. Passage B addresses the problem raised by these new online currencies and marketplaces: which, if any, parts of these new economies should be taxed? B's final paragraph provides what he considers to be tax doctrine and policy's answer to which parts of these new economies should be taxed.

    Skill tested: Primary Purpose · how this choice captures the passage's function is the move to repeat next time.

    66% picked this

  2. Passage A explains an economic

    Bad Passage A Match: explain theory

    Passage A discusses a new phenomenon: online game economies. There isn't any economic theory presented in Passage A. Castronova's observation that online auction listings were a form of currency trading isn't an economic theory.

    8% picked this

  3. Passage A reports on a

    Out of Scope Passage B: policing

    We can probably accept that Passage A reports on the subculture of people who play multiplayer online games with rich internal economies. But Passage B isn't saying, "it's been really hard to police those gamers, to crack down on their wrongdoing." Passage B is saying, "Does the IRS need to care about what's going on in these gaming worlds?" We have to first decide whether tax law even has any bearing over these worlds before we can then find rulebreakers and police them.

    20% picked this

  4. Passage A challenges the common

    Fails Both: common interpretation

    The phenomenon that both passages are discussing is that of online games that have complex internal economies. Is there a common interpretation of that phenomenon? No. Castronova interprets this phenomenon to include a form of currency trading. Does that challenge a common interpretation? We don't know, because the passage never defined what any common interpretation here would be.

    0% picked this

  5. Passage A states a set

    Out of Scope Passage B: theoretical

    It's pretty fair to say Passage A states a set of facts, in the sense that it's a reporting style, not an opinionated style. But it's more like "telling a factual story" than stating a set of facts. The more egregious problem here is that Passage B is drawing practical consequences. What, in practice, should tax law do in regards to these online economies? Passage B provides answers.

    5% picked this

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