Question

Describe the functions of barter system and its
demerits.

Answer 1

Answer:

In barter system, there is no common measure of value; therefore, it is difficult to find out any fixed ratio for exchanging goods and services. For example, an individual is willing to buy wheat in exchange of cloth. In such a case, the condition of double coincidence of wants is satisfied.

Explanation:

Answer 2

Your answer!

Barter System is a system of exchange in which one commodity is exchanged for another commodity.

Demerits of the barter system are:-

• Lack of double coincidence of wants.
• Lack of a common measure of value.
• Indivisibility of certain goods.
• Difficulty in making deferred payments.
• Difficulty in storing value