The Economic Organization of a P.O.W Camp Summary

Name
Course
Instructor
Date
The Economic Organization of a P.O.W Camp by R.A. Ranford
Question 1
The marginal rate of substitution between cigarettes and other commodities was relatively equal initially when the author pinched camp in Italy at a transit camp. A cigarette was exchanged for a chocolate ration. With the growth of the barter trade, food exchanges increased where the worth of jam was 1/21b of margarine and extras and not any other foodstuff. However, at the permanent camp, the marginal rate of substitution varied greatly where every commodity was priced in terms of cigarettes. The cigarette’s rate of substitution was high compared to any other good. It was the standard of value. For instance, a cheese would go for seven cigarettes while coffee extract attracted fancy prices in cigarettes or biscuits.
In Germany’s permanent camps, the marginal rate of substitution of cigarettes to other merchandises was high. Sales were made in terms of cigarettes leading to the cigarette full currency status. For instance, a laundryman would substitute a garment for two cigarettes; a coffee vendor is selling cocoa, tea or coffee at two cigarettes a cup. Unfortunately, the common use of the “cigarette” currency led to hoarding creating an imbalance in the supply and demand of commodities causing inflation or deflation in the economy. Lack of availability of cigarette adversely affected the price of other goods.
The variations of the worth of merchandises based on cigar...