Reading Comprehension

PT140 · S4 · P2 · Q7 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.

7.

Which one of the following pairs of titles would be most appropriate for passage A and passage B, respectively?

  1. "The Economic Theories of Edward

    "Intellectual Property Rights in Virtual

    Bad Match for Both

    We don't know a single economic theory of Edward Castronova. He's just an economist who's talking to us about weird new emerging economies within video games. And Passage B is about whether or not to tax certain aspects of online games, not about intellectual rights.

    3% picked this

  2. Correct

    "An Economist Discovers New Economic

    "Taxing Virtual Property"

    Why this is right

    Passage A consisted of an economist who couldn't believe his eyes / who was in shock / who discovered something curious: online game economies. So, sure, we could call that passage "an economist discovering new economic territory". Passage B is all about answering the questions laid out in the second paragraph, which are about if, or to what extend, items or virtual currency derived from online games should be taxable. So, sure, we could say entitle that passage "Taxing Virtual Property". Everything but the first paragraph of Passage B is about whether / how online games should be taxed.

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

    87% picked this

  3. "The Surprising Growth of Multiplayer

    "Virtual Reality and the Law"

    Weak Matches for Both

    The title for Passage A captures the shock / surprise / curious tone, but it doesn't do as good a job as (B) does at reflecting what it is we're fascinated by. The surprising thing in Passage A is how these games are creating worlds with their own economies, which are also leaking into the real world one. This answer choice makes it seem like the surprising thing in Passage A was how much online gaming has grown. That would be referring to how big an industry it is / how much video game companies are making. We should be talking about the economies within online games, not how online games fit into our normal economy. Passage B is specifically about taxing online gaming. The title this answer choice offers isn't as precise. It just says we're talking about "the law" more broadly.

    2% picked this

  4. "How to Make Money Playing

    "Closing Virtual Tax Shelters"

    Trap

    Bad Match for A / Weak Match for B There is something superficially pleasing about both answers. The Passage A title talks about money & games (and we want it to be talking about the money within online games). The Passage B title talks about taxes in the virtual world, and we want it to be talking about how we should tax online games. But Passage A never offers any advice about "how to make money". It's just an economist saying, "Holy crap -- did you guys realize that these online gamers have their own economy? Some of them are making legit money! They even have currency training. Wow, it's like an actual economy within these games." None of it is written as advice, as this title implies. It's also pretty generic to say "how to make money playing games". Do we mean poker? Scrabble? Or World of Warcraft / Fortnite? The title for Passage B suggests that the author points out a problem -- there are tax shelters in video games (people are hiding their wealth in video games) -- and then the author proposes a solution to getting rid of that problem. Instead, Passage B is more innocently asking unprecedented questions about whether any of the wealth being derived in / from these video games should be considered taxable. In providing its tax guidance, it does say in the final sentence that this would prevent tax shelters from forming. But that's different from closing a tax shelter that's already happening and not the main focus of the passage.

    3% picked this

  5. "A New Economic Paradigm"

    "An Untapped Source of Revenue"

    Weak Matches for Both

    The title for Passage A suggests that we would be calling these online gaming economies "a new economic paradigm". That's a little too broad and strong. It's certainly a new economic niche, a new market, a new ecosystem. But are online games actually giving us a whole new framework for how we think about economics? The title for Passage B suggests that the author was suggesting the taxation of online gaming a means to raise some money. The author seems more interested in just figuring out the applicability or inapplicability of tax law to this emerging field of online gaming economies. Casting this as an "untapped source of revenue" makes the author sound more like someone eager to suck money out of online gaming. But the author sounds more like a nerdy lawyer who is counseling us on how courts should think about these new forms of value.

    5% picked this

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