How does money solve the problem of double coincidence of wants ? Explain with an example of your own . (5 points )
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Double coincidence of wants is an important feature of the barter system. In barter system, a seller needs to find a buyer who can purchase a commodity and vice versa. This condition is extremely difficult to fulfil.
The introduction of money resulted in the end of the barter system where goods were exchanged according to the needs. Now, money acts as an intermediate in the exchange process, and thus, it is known as a medium of exchange. Anyone can exchange there goods for money and buy commodities that are required by them.
For example, a fruit seller wants to sell his fruits in order to buy wheat. In the absence of money, he will have to look for some person who wants to sell wheat and buy fruits. This is not easy and always possible. However, in case of availability of money as a medium of exchange, the fruit seller just has to find a buyer for her fruits. Once fruits are exchanged for money, she can purchase wheat from the market.
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