In a barter economy the number of prices in an economy with N goods is

Question

Quizplus · Accepted Answer

In a barter economy, there is no standard currency and exchange is done through the exchange of goods and services. For every good, there should be n-1 prices because if the price of the first good was set to all other N goods, it wouldn't make sense to include another price for the price of the second good, so we need one less price or transaction.

Therefore, the total number of prices in an economy with N goods will be (N-1) for the first good, (N-2) for the second good (as it already has a price with the first good), (N-3) for the third good (as it already has prices with the first two goods), and so on.

Hence, the total number of prices will be:

(N-1) + (N-2) + (N-3) +...+ 1
which simplifies to:
(N^2 -N)/2

Therefore, the answer is A) [N(N-1)]/2.

In a Barter Economy the Number of Prices in an Economy