Question

How does money solve the problem of double coincidence of wants? Explain with an example. 

Answer 1

Double Coincidence of wants is an essential feature in a BARTER system.

Example:-
In BARTER system
Suppose I sell grains and I want to sell my produce to only a person who has Pulses and suppose you have pulses and you want to sell your pulses only to a person who has cloths.
Here, double coincidence of wants is not present because no one wants to sell or buy what the persons have.

When Money is introduced :- 
1 Kg grains are Rs. 50 which I am selling and I want to buy pulses. 1 Kg pulses are Rs. 40 which you have and the cost of clothes is suppose Rs. 35. With money it is easier to make the transaction possible.

the double coincidence of wants as we required in the barter system. that problem is also solved by money. Hence, Money eliminates the need of double coincidence of wants.

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Yours, Jahnavi

Answer 2

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