Question

drawbacks of the barter system

Answer 1

1. Lack of Double Coincidence of Wants:

Quite often, two individuals do not need each other’s product. For instance, a farmer, willing to exchange food grains for a cow, can’t do so unless the owner of the cow is willing to accept food grains in exchange for it.

2. Lack of Divisibility of Certain Commodities:

Most often, commodities involved in exchange need not have identical values. What if the exchange involved splitting of the larger and the more valuable unit into smaller parts so that one or more parts of it may be exchanged for the smaller and the less valuable commodity? For example, the large commodity may be an elephant an

3. Lack of Common Denominator:

It is difficult to find a standard commodity as a unit of account to express the values of all the other commodities in. For instance, some measure of wheat may serve the purpose provided it implies same value for all the individuals at all the times and has the attribute of general acceptability.

Answer 2

Explanation:

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

→_→ Drawbacks of Barter Systems:

1. Lack of double coincidence of wants.

2. Lack of a common measure of value.

3. Indivisibility of certain goods.

4. Difficulty in making deferred payments.

5. Difficulty in storing value.