One day, Mira the merchant returned from Seashire. “Leo!” she cried. “In Seashire, a similar loaf sells for 8 Sea coins (S$). But listen—our currency is weak. Right now, V$1 equals only S$0.10. That means your V$5 loaf is worth just S$0.50 there!”

In Verdania, Leo the baker was famous for his sourdough loaf. It cost him 2 Verdani coins (V$) to make (flour, salt, firewood). He sold it for V$5. The people were happy; V$5 was a fair lunch.

Panic set in. Leo raised his price to V$20 to match the Seashire value (V$20 = S$2, still not S$8, but closer). His neighbors grumbled. “We can’t afford bread anymore!”

That night, Leo couldn’t sleep. He drew two scales on a napkin. On one side: What a loaf can buy in Verdania (a full meal for one person) . On the other side: What a loaf can buy in Seashire (also a full meal for one person) .

“Exactly,” Mira said. “Seashire merchants will buy all your bread, ship it there, and sell it for S$8. You’ll run out of bread for your own neighbors.”

He realized: the number on the coin didn’t matter. What mattered was —the idea that a loaf should give the same satisfaction in both countries.

The Baker and the Baker’s Dilemma