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Last week, I went to a store to look for a basketball. I saw one in a glass case I liked. I talked to a salesclerk about it. He was not a native English speaker. I am going to write down our conversation below.

As I was pointing to the basketball, I asked the salesclerk, "Are you selling this basketball?

He replied, "We sell it."

I said, "I want it."

He said, "You want one."

In our conversation, I used the present continuous (selling) and he used the present simple (sell). I said: "... it" and he said: "... one".

Who was correct on the verb tense and the word choice highlighted in black?

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Looks like you both were not on the same page. You were referring to the specific basketball you saw in the glass case. The sales clerk, on the other hand, was referring to their shop selling the basketballs in general.

That is why, even when you used the word this to refer to that specific ball, he understood as if you were asking if they sell basketballs at all.

This misinterpretation led to the usage of words as described by you.

I'd say both of you were correct as per your understandings. Now whether you were not clear enough that it was the ball in the glass case you were talking about in the first place, or that the guy was wrong in interpreting as basketballs in general, is something that cannot be determined for sure.

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"Are you selling this basketball?" (right now)

"We sell it." (yeah, that is our work. we do it everyday.)

but looks like he did not understand your first line and he listened "this" as "these".

Present Simple or Present Continuous?

We use the Present Simple

To talk about facts (things which are true at any time):

Mark speaks good English.

For situations that exist over a long time, and for actions that are repeated (e.g. people's habits or events on a timetable):

John works for an advertising company.

He lives in Japan.

We use the Present Continuous

To talk about actions in progress at the time of speaking:

Mark is busy. He is speaking on the phone.

For things that continue for a limited period of time around now( holidays,visits, temporary jobs, courses):

I am doing a course in computer science.

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