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Chapter 25: Problem 1

A baseball fan with a Mike Trout baseball card wants to trade it for a Giancarlo Stanton baseball card, but everyone the fan knows who has a Stanton card doesn't want a Trout card. What do economists call the problem this fan is having?

Short Answer

Expert verified
The problem the baseball fan is facing is called 'The Double Coincidence of Wants' in Economics.

Step by step solution

01

Identify the problem

The baseball fan has a Mike Trout card and wants a Giancarlo Stanton card. However, the people the fan knows who have the Stanton card aren't interested in the Trout card. This describes a situation where there's a lack of coincidence of wants, which basically means that two people have what the other needs, but they don't want what the other has to offer.
02

Define the Economic Term

In Economics, this problem is called 'The Double Coincidence of Wants'. It refers to the difficulties in barter (or trade) that arise when one person's wants (or needs) doesn't coincide with what the other person has to offer.
03

Provide an Example

For instance, if Person A has apples and wants bananas, and Person B has bananas but wants oranges, there's a lack of double coincidence of wants because Person A can't trade apples for bananas with Person B because Person B doesn't want apples.

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Most popular questions from this chapter

During the years from 2010 to 2016 , the average annual growth rate of \(\mathrm{M} 1\) was 10.3 percent, while the inflation rate as measured by the GDP deflator averaged 1.6 percent. Are these values consistent with the quantity equation? If you would need additional information to answer, state what the information is. Are the values consistent with the quantity theory of money? Briefly explain.

In November 2016 , the Indian government decided to withdraw paper currency that made up more than 86 percent of the value of all rupee bills in circulation. An article in the Wall Street Journal published shortly after that decision described a small merchant in India as having "traded one customer a kilogram of potatoes, cauliflower and tomatoes for half a liter of honey. That was a good deal, he says. In normal times, the honey would be 120 rupees in the market (around \(\$ 1.80\) ) and the vegetables 70 rupees." Is this merchant's ability to arrange a barter deal with a customer an indication that the Indian economy doesn't actually require money to function efficiently? Briefly explain.

During the Civil War, the Confederate States of America printed large amounts of its own currency-Confederate dollars- to fund the war. By the end of the war, the Confederate government had printed nearly 1.5 billion paper dollars. How would such a large quantity of Confederate dollars have affected the value of the Confederate currency? With the war drawing to an end, would southerners have been as willing to use and accept Confederate dollars? How else could they have bought and sold goods?

Based on a Survey of Consumer Payment Choice, researchers from the Federal Reserve Bank of Boston estimated that the average consumer, 18 years of age and older, held about \(\$ 202\) in currency. However, as noted in the chapter, there is actually about \(\$ 4,500\) of currency in circulation for every person in the United States. a. How can the amount of U.S. currency in circulation be so much higher than the amount held by the U.S. population? b. What does the difference in part (a) imply about the measures of the money supply of the United States?

If the money supply is growing at a rate of 6 percent per year, real GDP is growing at a rate of 3 percent per year, and velocity is constant, what will the inflation rate be? If velocity is increasing 1 percent per year instead of remaining constant, what will the inflation rate be?
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