Question

In prison, cigarettes are sometimes used among inmates as a form of payment. How is it possible for cigarettes to solve the “double coincidence of wants” problem, even if a prisoner does not smoke?

Short answer

Smokes satisfy the double coincidence of wants in that both parties to a trade are in need of cigarettes either for consumption or for further trade.

Step-by-step solution

Step 1. Introduction

Double coincidence of wants refers to the requirement that both parties should agree to accept the item the other one is offering at the same time.

Step 2. Explanation

Even if he or she is a non-smoker, if the prisoner learns that others in the prison will accept cigarettes as payment, they will be willing to accept cigarettes as payment as well. Rather than forcing convicts to barter and trade favors, cigarettes meet the double coincidence of demands by allowing both parties to a trade to "buy" products or services with them.