Question

Explain the inconvenience caused by barter exchange.

Answer 1

Answer:

The barter system is an inconvenient method in the following ways;

1) The problem of storing wealth ; suppose you brought tomato in exchange of cotton or anything, it will occupy more space and it is perishable, you can't keep it for long period of time.

Answer 2

Barter System

Explanation:

The barter system is the exchange of goods and services in acceptance of another goods or services as payment. It is the oldest mode of exchange before money was invented. Its inconveniences are:

1. Double coincidence of wants: The buyer and seller should agree to buy and sell each other's commodity in exchange. It is very difficult to find the buyer who is in need of commodity which the seller wants to sell.
2. Lack of proper valuation of goods: There is no equal valuation of goods. All goods will be equal.
3. Store of value: Barter system lacks the function of store of value because the sold commodities cannot be saved for future use whereas money can be easily saved as a deposit.