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I asked about the trick here, and somebody pointed me to Anthony Robbins' book. The first two solutions seem to assume that 1:1 is the actual quantity of money in the economy. But the other two solutions are extremely non-sensical. The first one assumes that every single person at the table has the exact same subjective value of the currency, so that the value of the currency is divided by the number of people at the table. That is clearly impossible. If you take this one step further and ask "What's the value of the currency in terms of monetary units?" you get:
$\frac{C}{N} = \frac{I}{N} = \frac{E}{N} = \frac{W}{N}$
Obviously, the numbers can only add up to 1.
The second one asks "What's the market value of the currency?". But that's impossible as well. The question implies that people are actually trading things for it and that it can be exchanged for things, which are clearly not true. "What's the market value of the currency?", the answer would be:
$MVCP = \frac{EC}{N} = \frac{I}{N} = \frac{W}{N}$
Once again, the numbers add up to 1. The problem is that we're assuming that currency is worth its value in terms of things, which is not necessarily true. So, people might value it for things like "Sugar, chocolate and pasta" and not at all for things like housing or air conditioners. It's obviously a strange question, and I was surprised that the assumption of a 1:1 exchange rate was enough to get even the first correct answer.
So, the correct answer is clearly either the first or the second. The trick is that we're being confused because the question is being posed in terms of money, which is a very strange currency to use to ask these questions.
A:
I'm not sure what you mean by "We can't ask the question...". If you mean to say "Can we ask the question in a real world context", then the answer is "yes", with some caveats.
If you mean "Can we ask the question in the context of our closed economy", then the answer is "yes", with the caveat that the whole point of the problem is to illustrate that the closed economy doesn't allow for a proper question to be asked.
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