Question

What is meaning of Barter system ? Why is double coincidence of wants is an essential feature of a Barter system ?​

Answer 1

Explanation:

In the olden days, when modern currency was not in vogue, people had to sell and buy each others commodities. This was called the barter system. For instance if a shoe manufacturer wants to buy wheat, he has to find a farmer who wants to buy his shoes in exchange for the wheat. That is, both parties have to agree to sell and buy each others commodities. This is known as double coincidence of wants. In a barter system where goods are directly exchanged without the use of money, double coincidence of wants is an essential feature.