Question

what are the advantages and disadvantages of barter system?

Answer 1

Barter system refers to an act of trading goods and services between two or more than two parties without involving the use of money.

Some of the advantages of Barter system are as follows

1) It is a simple system free from the complex problems of the modern monetary system.

2)The complexity of international trade, like foreign exchange crisis and adverse balance of payments, do not exist in the barter system.

3) Personal and natural resources are utilized to meet the needs of the society without involving any wastage.

Apart from the above mentioned advantages, there are also certain disadvantages to the system. They are:

1) Absence of common measure value

Money acts as a role of a measure of value of all goods in a monetary economy thus helping in measuring their values against each other. This remains to be absent in a barter economy.

2)Invisibility of certain goods

A barter transaction cannot takes place if an individual wants to buy a certain amount of goods but only has single invisible unit of another good which is worth more than what the individual wants to obtain.

Answer 2

Answer:

Disadvantages

A complication of bartering is determining how trustworthy the person you are trading with is.  

The other person does not have any proof or certification that they are legitimate, and there is no consumer protection or warranties involved.

This means that services and goods you are exchanging may be exchanged for poor or defective items.  

You would not want to exchange a toy that is almost brand new and in perfect working condition for a toy that is worn and does not work at all would you?  

It may be a good idea to limit exchanges to family and friends in the beginning because good bartering requires skill and experience.  

At times, it is easy to think the item you desire is worth more than it actually is and underestimate the value of your own item.

Advantages

On the positive side, there are great advantages to bartering.  

As mentioned earlier, you do not need money to barter.  

Another advantage is that there is flexibility in bartering.  

For instance, related products can be traded such as portable tablets in exchange for laptops. Or, items that are completely different can be traded such as lawn mowers for televisions.

Explanation: