Economist: Money, no matter what its form and in almost every culture

Question

Economist:  Money, no matter what its form and in almost every culture in which it has been used, derives its value from its scarcity, whether real or perceived.

Anthropologist:  But cowrie shells formed the major currency in the Solomon Island economy of the Kwara'ae, and unlimited numbers of these shells washed up daily on the beaches to which the kwara'ae had access.

Which one of the following, if true about the Kwara'ae, best serves to resolve the apparently conflicting positions cited above?

(A) During festivals they exchanged strings of cowrie-shell money with each other as part of a traditional ritual that honored their elders.

(B) They considered porpoise teeth valuable, and these were generally threaded on strings to be worn as jewelry.

(C) The shells used as money by men were not always from the same species of cowrie as those used as money by women.

(D) They accepted as money only cowrie shells that were polished and carved by a neighbouring people, and such shell preparation required both time and skilled labor.

(E) After Western traders brought money in the form of precious-metal coins to the Solomon Islands. Cowrie-shell money continued to be used as one of the major media of exchange for both goods and services.

BeingHan · Answer

D real scarcity of carved cowrie shells

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Skywalker18 · Answer

Answer D -- Although Cowrie shells are available in unlimited numbers on beaches , they need to be polished and carved before they can be used as currency .
Polishing and carving takes time --> reduces the availability of shells as currency

adkikani · Answer

nightblade354   generis   ammuseeru   pikolo2510   gmatexam439   GMATNinja   Harshgmat   KarishmaB

Can anyone explain the contrast and if my understanding of highlighted text is correct?

OK, So as per economist: money derives its value when it is scare.
I CAN NOT ASSUME : money derives its value  ONLY  when it is scare.

Anthopologist disagrees, saying that cowrie shells formed the major currency in the Solomon Island economy of the Kwara'ae
(so before reading further, I am assume he will say: why these shells need to be ABUNDANT, since had shells been 
short in resouces, then they CAN be a part of major currency and is in line with Economist. The BUT is crucial here.)
 Anthropologist says unlimited (very huge) number of shells got washed away on beaches.
 
I am skeptic about my italic understanding and need validation of the same.

nightblade354 · Answer

adkikani ,

Simply, the statement is that we have unlimited shells, yet shells have value. Where is the gap? Unlimited should mean worthless. So how do rectify this? We have (D), which says that it takes time and energy to create valuable shells that can be used to trade with. Therefore, this must be our solution.

Does this help?

Helium · Answer

Dear adkikani, You are right about BUT being important. Anthropologist simply stating that there is abundance of cowries is sufficient to have valid argument. why these shells need to be ABUNDANT - This may or may not necessarily be stated. Once Anthropologist states (a) cowrie shells formed the major currency in the Solomon Island economy and (b) Such shells are abundant He has taken stand against Economist - Who has taken position that money derives its value when it is scare (real or perceived) Also this might interest you wrt highlighted sentence by you - wash up - if the sea washes something up somewhere, it carries it and leaves it there Eg :Two whales have been washed up on the beach. https://www.macmillandictionary.com/dic ... sh/wash-up wash away - if something such as rain or a river washes something away, it carries it away Eg : Heavy rains have washed away the bridge https://www.macmillandictionary.com/dic ... /wash-away Hope this helps

RohitSaluja · Answer

Analysis of the argument

Economist says that scarcity which could be real or perceived is what makes money valuable while anthropologist says shells which are being used as money in some culture washes away on the shore. We need to resolve the paradox that if shells are being washed away then how is it that they are valuable. Let's look at the options

(A) During festivals they exchanged strings of cowrie-shell money with each other as part of a traditional ritual that honored their elders. -  We need to resolve the paradox between two opposing points of view, this does not help us do that

(B) They considered porpoise teeth valuable, and these were generally threaded on strings to be worn as jewelry. -  Irrelevant to the argument

(C) The shells used as money by men were not always from the same species of cowrie as those used as money by women.  Not related to the argument

(D) They accepted as money only cowrie shells that were polished and carved by a neighboring people, and such shell preparation required both time and skilled labor. -  This helps explains why even if shells are getting washed ashore in large quantity might still be useless because the ones which are used as currency requires work which takes both time and skilled labor

(E) After Western traders brought money in the form of precious-metal coins to the Solomon Islands. Cowrie-shell money continued to be used as one of the major media of exchange for both goods and services. -  Irrelevant ot the argument

dhairya18 · Answer

To resolve this paradox, we need to reconcile the Economist's rule (money's value comes from scarcity) with the Anthropologist's observation (cowrie shells were used as money despite being "unlimited" on the beaches).

The Paradox
The Rule: Money must be scarce to have value.
The Counter-Example: The Kwara'ae used cowrie shells as money, yet these shells washed up in "unlimited numbers."

Option Analysis
A) During festivals they exchanged strings of cowrie-shell money...
This describes a ritual use of the money but doesn't explain how the shells maintained value despite being abundant. It doesn't address the "scarcity" issue.

B) They considered porpoise teeth valuable...
The value of porpoise teeth is irrelevant to explaining how cowrie shells functioned as a scarce currency.

C) The shells used as money by men were not always from the same species...
This adds a detail about gender roles but doesn't solve the core problem. Even if the species differed, the prompt implies shells (in general) were unlimited on the beaches.

D) They accepted as money only cowrie shells that were polished and carved by a neighbouring people...
Correct. This perfectly resolves the conflict. While "raw" shells on the beach were unlimited, the "money" shells required skilled labor and time from a third party. This process introduces perceived and real scarcity, fitting the Economist's criteria.

E) After Western traders brought money... cowrie-shell money continued to be used.
This shows the currency was durable and persistent, but it still doesn't explain why it had value in the first place if the supply was unlimited.

Correct Answer: D

Economist: Money, no matter what its form and in almost every culture

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Economist: Money, no matter what its form and in almost every culture

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