What is the barter system what are its disadvantage?
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However, the barter system was not sufficient to serve the ever-increasing needs and wants of individuals.
Following are some of the drawbacks of the barter system:
(a) Double Coincidence of Wants:
Refers to one of the assumption of barter system that led to its failure. The double coincidence of wants implies that the exchange of goods and services between two individuals would take place only when both the individuals require each other’s goods. For instance, the exchange of goods can only lake place between Mr. M and Mr. N in case Mr. N requires the good that Mr. M is selling. On the other hand, Mr. M is also willing to purchase the good that Mr. N is selling.
(b) Common Measure of Value:
Constitutes one of the important reasons for the failure of the barter system. In barter system, there is no common measure of value; therefore, it is difficult to find out any fixed ratio for exchanging goods and services.
For example, an individual is willing to buy wheat in exchange of cloth. In such a case, the condition of double coincidence of wants is satisfied. However, another problem that arises in this exchange is the exchange value of cloth and wheat.
Following are some of the drawbacks of the barter system:
(a) Double Coincidence of Wants:
Refers to one of the assumption of barter system that led to its failure. The double coincidence of wants implies that the exchange of goods and services between two individuals would take place only when both the individuals require each other’s goods. For instance, the exchange of goods can only lake place between Mr. M and Mr. N in case Mr. N requires the good that Mr. M is selling. On the other hand, Mr. M is also willing to purchase the good that Mr. N is selling.
(b) Common Measure of Value:
Constitutes one of the important reasons for the failure of the barter system. In barter system, there is no common measure of value; therefore, it is difficult to find out any fixed ratio for exchanging goods and services.
For example, an individual is willing to buy wheat in exchange of cloth. In such a case, the condition of double coincidence of wants is satisfied. However, another problem that arises in this exchange is the exchange value of cloth and wheat.
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Barter System Or Double Coincidence Is The System In Which A Person Exchange His/her Commodity or Service which the other person can provide.
Disadvantages-
(i)Lack of Double Coincidence of Wants: Barter system can work only when both buyer and seller are ready to exchange each other’s goods.
(ii)Lack of Common Measure of Value: In the barter system, all commodities are not of equal value and there is no common measure (unit) of value of goods and services, in which exchange ratios can be expressed.
(iii)Lack of Standard of Deferred Payment: The borrower may not be able to arrange goods of exactly same quality at the time of repayment.
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Disadvantages-
(i)Lack of Double Coincidence of Wants: Barter system can work only when both buyer and seller are ready to exchange each other’s goods.
(ii)Lack of Common Measure of Value: In the barter system, all commodities are not of equal value and there is no common measure (unit) of value of goods and services, in which exchange ratios can be expressed.
(iii)Lack of Standard of Deferred Payment: The borrower may not be able to arrange goods of exactly same quality at the time of repayment.
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Plz Mark As Brainliest.
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