These are the conditions in Baldyville:
No two inhabitants have the same number of hairs on their head.
No inhabitant has exactly 518 hairs.
There are more inhabitants in town than hairs on any individual inhabitant's head.
What is the highest possible number of inhabitants?
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If there is only 1 inhabitant, then from condition 3 we know he's bald, i.e., he has 0 hairs on his head.
If there are 2 inhabitants, then from condition 3 we know that each of them has either 0 or 1 hair(s) on his head. But by condition 1, they can't be the same, so one has to have 0 and the other has 1.
Then from conditions 1 and 3 we can determine that if there are n villagers, then there must be people with 0 , 1 , 2 , 3 , . . . , n − 3 , n − 2 , and n − 1 hairs on their heads. Then condition 2 cannot hold if there are 519 or more people in town, so there can be no more than 518 inhabitants of Baldyville.