Question

Person Z tries to explain how the requirement of a double coincidence of wants in a barter system limits trade and exchange. Which of the following justification do you think will be used by him/her?

विकल्प

• It makes trade more complicated, as each person must have what the other person wants, limiting the pool of potential trade partners.

• The barter system allows trade to be conducted more efficiently since both parties already know what they need from the transaction.

• It increases the number of exchanges because each person can trade for exactly what they want.

• The system creates value for goods by ensuring that both parties have a direct need for each other’s goods.

Answer 1

It makes trade more complicated, as each person must have what the other person wants, limiting the pool of potential trade partners.

Explanation:

In a barter system, trade is difficult because both people must want each other’s goods at the same time. This double coincidence of wants is hard to find, so it limits trade and makes exchanges more complicated.