Why did the usage of the barter system disappear from the economy?
Answers
Answer:
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Explanation:
Barter System is a method of exchange where goods and services are sold or exchanged for goods and services without using any medium of exchange such as money. Barter System was used when money or currency was not invented.This was possible only in a simple economy but after the development of economy, direct exchange of goods without the use of money, was not without defects. Today barter exchange has virtually vanished because of the difficulties faced during barter exchange.Human wants are unlimited and have varied choices.During the barter system, exchange took place when both the parties have commodities which they want and desire for and if they don't have that, there will be no exchange.In the beginning of the year, ma'm had conducted this activity. The class was divided into 10 groups and the groups were provided with chits in which names of various commodities were printed like food, pizza, petrol, computer.
What i learned from this activity is that it is really very difficult to convince people to buy our commodity and give theirs. We had to go to various groups and shout if anyone wishes to buy our product.We had to even the basic products for living like clothes, food, house, etc. It is now that we understand the importance of money. Money was basically invented for a equal exchange of commodities. Money was invented so that it could be a medium of exchange. I really enjoyed the experience and understood the importance of money.
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1) it had double coincidence of wants.
2) money is more convenient and practical.
3) with increase in trade and manufacturing it was not possible to go with barter system.
4) all goods cannot be easily divided for exchange.
5) it is easy to store money in banks rather storing goods and increasing its maintenance cost.