Explain the problem of ‘double coincidence of wants’ faced with the barter system of
exchange with example
Answers
Answer:
The problem of double coincidence of wants arises when there is no medium of exchange. In such a case the buyer has to make a search for the seller who also wants to buy the same good which the buyers itself offers for exchange. Money has solved the problem by working as a medium of exchange.
Explanation:
The problem of double coincidence of wants arises when there is no medium of exchange. In such a case the buyer has to make a search for the seller who also wants to buy the same good which the buyers itself offers for exchange.Money has solved the problem by working as a medium of exchange. The seller can sell the goods in the market in return for money and buy the goods he wants to buy in return for the money. Detailed Answer: Double coincidence of wants means that goods in possession of two different individuals are needed by each other. But it is difficult to find a person who wants your goods and at the same time possesses a good that you want to buy. Money as a medium of exchange has removed the major difficulty of double coincidence of wants. It means that money acts as an intermediary tor the goods and services in exchange transactions. In the monetary system act of sale and purchase of the goods and services are separated from each other. If one wants to buy goods he can do so with money. And if one wants to sell goods he can sell these for money