Question

Question 01. The Caveman's Dilemma – 3 Solutions. (5 pts. each/10 pts. total). The Caveman's Dilemma: What are the other two solutions to the Caveman's Dilemma' that were not covered in the Origin of Money lecture? Each solution is worth 5 points or 10 points altogether. The requisite transactions arriving at each of the two solutions must be specified. Solution One: Individual A exchanges commodity p with Individual B. B drops out of the process because he gets the commodity he wants for consumption or production. Individual A receives commodity 9 from B in exchange. Individual A is willing to take possession of commodity q for use not in consumption or production but for use as a medium of exchange. Individuals A and C subsequently get together and transact with one another. Individual A exchanges commodity q for commodity r. Individual A desires commodityr for his own consumption or production. Individual C wants commodity q for his own consumption or production. Commodity q is the medium of exchange in this solution. Accordingly, primitive indirect exchange presents itself as an alternative to direct exchange. The caveman's dilemma is solved. Solution 2? Solution 3?

Answer 1

Solution 2

Individual A exchanges commodity P with individual B. Then A drops out of the process because he gets the commodity he wants for consumption or production. Individual B receives commodity Q from B in exchange. Individual B is willing to take position of commodity Q for use not in consumption of production but for the use of medium of exchange.

Individual B and C subsequently get together to transact with one another. Individual B Exchanges commodity Q for commodity R individual B desires commodity R for his own consumption or production individual C wants commodity Q for his own consumption and production commodity Q is the medium of exchange in the solution. Caveman's dilemma solved.

Solution 3

Individual A and B transact with each other and A exchanges commodity P with individual B. And in return be exchanges commodity Q with A. Here both the individuals need for consumption and production is satisfied so there is no medium of exchange. Thus Caveman's dilemma is solved.