How does money solve the problem double coincidence of wants
. owa
Answers
By acting as a medium of exchange.
Double Coincidence of Wants is an essential feature in a barter system, where goods are directly exchanged without the use of money. However, in an economy using money as a medium of exchange, eliminates this by providing the crucial intermediate step.
For example, it is not necessary for a shoemaker to look for a farmer who will buy shoes made by him and at the same time, sell rice to him. All he has to do is to find a buyer for his shoes, who will pay him money for them.
With this money he can purchase rice or any other commodity available in the market.
Answer:
Double coincidence of wants is an essential feature of the barter system of exchange, where goods are exchanged for goods directly. In such a case, it becomes necessary that both the sides involved in the exchange agree to buy each others commodities. This is called doubled coincidence of wants. What one person sells is exactly what the other wishes to buy. But it is a major problem in exchange since such a situation can't be created easily. Money solves this problem by acting as an intermediate medium of exchange. With money, the double coincidence of wants no longer needs to be satisfied as one can sell or buy commodities using it alone.
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