Why does money solve the problem of double coincidence of wants explain with an example of your own?
Answers
Answer:
When we talk of double co incidence of wants it means that the consent of both the sellers are needed to match but the use of money leads to the exchange of goods without any match in boths desire and we can buy things without any problem.
Eg: There are three person namely A, B and C where person A needs clothes that is with person B and B needs wheat that is with C as well as C needs wheat that is with person A here double co incidence of want doesnot occur. In such a case if money is used as medium of exchange then each one will get their desired items from one and the other .
Answer:
Double coincidence of wants occurs when goods or commodities are exchanged without the use of money. Here, both the individuals who exchange goods are actually in need of those goods. In a barter system where goods are directly exchanged without using money, double coincidence of wants is an essential feature. By serving as a medium of exchanges, money removes the need for double coincidence of wants and the difficulties associated with the barter system. Now, no specific buyer or seller is required for interchanging of products. For example, a farmer has to sell wheat in exchange for cereals then it would be difficult for him to find such a buyer. But money will solve this problem. Now, the farmer can sell his wheat to someone who needs this and with the earned money he can buy cereals for him as well.
Explanation: