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What is Meant by the Double Coincidence of Wants? How Does Money Overcome this Problem? - Economics

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Question

What is meant by the double coincidence of wants? How does money overcome this problem?

Solution

A person with a particular good has to find a person who has the good of his wants and he should also possess the good wanted by the other person. This is known as the double coincidence of wants. The introduction of money resulted at the end of the barter system where goods were exchanged according to the needs. Now, money acts as an intermediate in the exchange process, and thus, it is known as a medium of exchange. Anyone can exchange his goods for money and buy commodities required by him or his family.

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APPEARS IN

 2016-2017 (March) (with solutions)
Question 3.3 | 2.00 marks
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What is Meant by the Double Coincidence of Wants? How Does Money Overcome this Problem? Concept: Concept for Barter System.
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