[Avodah] economics 101

[Micha Berger]

On Wed, Jan 09, 2013 at 01:51:13PM -0500, Zev Sero wrote:
> On 9/01/2013 10:08 AM, Eli Turkel wrote:
>> In Baba Mezia 40 the gemara states that one cannot make a profit of more
>> than 1/6

> On food.

Onaas mamon applies to all commodities except avadim. As long as there
is a shaar (a going rate, which is why I used the word "commodities")
and it's metaltelim.

>           And note that this 1/6 is "milegav", so it's really a 20% profit
> margin, and that's after all expenses are taken into account...

The SA's examples are (CM 227:2-4):
    [Onaah by the buyer:]
    - selling the value of 6 for 5 [- 1/6, underpaying by 1/6 the value]
    - ... or the value of 7 for 6 [- 1/7, underpaying by 1/6 the price]
    [Onaah by the seller:]
    - or selling the value of 5 for 6 [+ 1/5, overcharging by 1/6 the price]
    - or the value of 6 for 7 [+ 1/6, overcharging by 1/6 the value]
    then this is ona'ah ... and he me'aneh must pay the ona'ah...

    If the ona'ah was a kol shehu less... he doesn't have to return
    anything... it is the norm for everyone to be machol that.

    If the ona'ah was more than 1/6 by a kol shehu, like he sold 60
    for 50 minus a perutah [ie 49.75, or - 1/5.85], the sale is batel,
    and the mis'aneh may (yakhol) return the property, but the me'aneh
    may not reneg if the other wants it...

You'll notice that I phrased each of the four cases three ways:
    - the SA's wording
    - the difference in value
    - how it comes to 1/6 -- whether that's in value or in price.

That last formulation, value vs price, is from the SMA s"q 3. I don't
know why he uses that rather than milegav vs milevar. After all, the
SMA's +1/6 of the value is, as Zev noted, 1/6 the price milegav, ie +20%
on the price.

But if we look at "cannot make a profit" rather than violating ona'ah:

The buyer will have to pay at least the larger of the SA's first two
shiurim in order for the sale to be binding on the seller. So his best
case is spending more than 6 to get a value of 7. Profit caps at under
1/6 of the money laid out.

And the seller can't charge more than the smaller of the SA's latter
two shiurim. So the best he can do is selling merchandise worth 6 for
just under 7, also a profit cap of under 1/6.

The 20% Zev speaks of doesn't reach my calculation of profit cap because
it's more than 1/6 the value. And the seller's profit is in relation to
his investment, which is in value.

Tir'u baTov!
-Micha

-- 
Micha Berger             Every child comes with the message
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