I have a cardboard box. Inside the box, there is a red cup. Inside the red cup, there is a blue coin. I take the red cup out of the box and turn it upside down on my kitchen table. Where is the blue coin?

Here's the chain of events. The blue coin starts inside the red cup, which is inside the box. When you lift the red cup out of the box, the coin comes with it, still sitting inside the cup. When you turn the cup upside down on the kitchen table, the coin falls out of the cup and lands on the table. The cup is now resting mouth-down on the table, and the coin is underneath it.

Three objects, three locations:

• The cardboard box: on whatever surface it was on, now empty.
• The red cup: upside down on your kitchen table.
• The blue coin: on the table, trapped under the cup.

The question is designed to make you track multiple containers and a transfer, hoping one of the moves gets lost. The moment worth slowing down on is "turn it upside down." That's the step that deposits the coin. If you'd just moved the cup upright to the table without flipping it, the coin would still be inside the cup. The flip is what changes the coin's position from "inside the cup" to "under the cup, on the table."