Consider an Island Where People Use Sand Dollars (Shells) as Currency

question 66

Essay

Consider an island where people use sand dollars (shells) as currency. For simplicity, assume that people consume only one good: fish. Currently, there are 400 sand dollars in circulation and there are 200 fish purchased each year. Based on this information, what is the price of fish?
Now, suppose that a change in climate leads to new sand dollars washing ashore, leaving a total
of 500 sand dollars. If there are still 200 fish purchased each year, what is the new price of fish? In order to prevent inflation, what would have to happen to the amount of fish purchased each year?

---

Definitions:

Minor

A person who is below the legal age of majority, which varies by jurisdiction, making them legally incapable of entering into certain contracts and responsibilities.

Intoxicated Person

An individual under the influence of alcohol or drugs to the extent that their mental or physical capabilities are significantly impaired.

Manufacturer's Suggested Retail Price

The amount of money for which the maker of a product recommends that it be sold in retail stores, often used as a standard for pricing, though actual retail prices can vary.

Necessaries

Items or services deemed essential for daily living, such as food, shelter, clothing, and medical care, particularly in contexts involving the provision for those unable to contract for themselves, like minors.