Question

In an economy consisting of X+1 commodities, without money, the number of ratios of exchange is given by the simple formula

a. X/2
b. X (X+1)/2
c. (X-1)/2X
d. X (X-1) /2

Answer 1

The number of unique exchange ratios in an economy with X+1 commodities is given by the formula X(X+1)/2.

Step-by-step explanation:

The question asks for the number of ratios of exchange in an economy consisting of X+1 commodities without money. In such an economy, each commodity could potentially be exchanged for every other commodity, leading to multiple possible exchanges. However, with X+1 commodities, you do not count the exchange of a commodity with itself, and each exchange is counted twice (A for B and B for A are the same exchange). Therefore, the number of unique exchange ratios is given by the formula X(X+1)/2, which accounts for all possible pairs without repetitions or self-pairs.