Question

Explain the limitation of barter system.
- Difficult in Storing Value
- Problem of Measurement Value
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Answer 1

Answer:

lack of common measure in value

Answer 2

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. However, another problem that arises in this exchange is the exchange value of cloth and wheat.