It is economic question the question is what is double coincidence of wants explain with an example of your own?
Answers
Answer:
Money solves the problem of double coincidence of wants by acting as a medium of exchange. Double coincidence of wants implies a situation where two parties agree to sell and buy each other’s commodities., i.e., what one party desires to sell is exactly what the other party wishes to buy. Money does away with this tedious and complex situation by acting as a medium of exchange that can be used for one and all commodities. For example, if an ice-cream vendor wants a bicycle but the bicycle manufacturer wants clothes, and not ice-creams, then the vendor can use money to obtain a bicycle. He does need to adhere to the bicycle man’s needs because money acts as the common medium of exchange. Similarly, the bicycle manufacturer can then use the money to buy clothes.
Answer:
Explanation:
Question :-
What is double coincidence of wants ?
Answer :-
Before we advent of money, people used to follow barter system of exchange. In barter system, goods are directly exchanged (without use of money) between two or more parties who agrees to exchange each other's goods. It is known as double coincidence of wants.
The major drawback of barter system was the lack of double coincidence of wants, as there was no common value for exchange.
The use of money eliminated the need of double coincidence of wants. It was accepted as a common medium of exchange and it could be easily stored.