What do you mean
mean by lack of double coincidence of wants? How
introduction of money solved this problem?
Answers
Answer:
Lack of double coincidence exists in barter exchange. It refers to the situation where the mutual wants of the buyer and seller are less likely to be fulfilled simultaneously. If the buyer's wants can be fulfilled by exchange but cannot provide what the seller wants, the exchange is unlikely to happen.
Explanation:
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.
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