What are the three limitations of barter system?

1 Answer

• The three limitations of the barter system are:
• (i) Lack of double coincidence of wants. It means, both the parties have to agree to sell and buy each others’ commodities.
• (ii) Valuations of all the goods cannot be done easily.
• (iii) There are certain products which cannot be divided.

What are the limitations of barter system & also explain the functions of money?

The barter system has a number of limitations, including the double coincidence of wants, the absence of a common measure of value, indivisibility of certain goods, difficulty of deferred payments, and difficulty of storing wealth.

What are the limitations of barter system class 12?

The major drawbacks of the barter system were: (i) Lack of double coincidence of wants It was a major drawback of the barter system. (ii) Lack of common measure of value In barter system, there was absence of a common unit of measurement in which the value of goods and services can be measured.

Which of the following is not a limitation of barter system?

Answer: Barter system had many drawbacks like lack of double coincidence of wants, lack of a common unit of value, difficulty of future payments or contractual payments and difficulty of storage of value and transfer of value. Therefore, unemployment is not a problem related to barter system.

What are the limitations of the barter system that made money a more convenient means of transaction?

The limitations of barter are often explained in terms of its inefficiencies in facilitating exchange in comparison to money. It is said that barter is ‘inefficient’ because: There needs to be a ‘double coincidence of wants’ For barter to occur between two parties, both parties need to have what the other wants.

What are the limitations of barter system class 10th?

The three limitations of the barter system are: i Lack of double coincidence of wants. It means both the parties have to agree to sell and buy each others’ commodities. ii Valuations of all the goods cannot be done easily. iii There are certain products which cannot be divided.

What are the disadvantages of barter system class 10?

Drawbacks of Barter Systems:

• Lack of double coincidence of wants.
• Lack of a common measure of value.
• Indivisibility of certain goods.
• Difficulty in making deferred payments.
• Difficulty in storing value. Was this answer helpful? Similar questions. Given Reasons.

What are problems of barter system?

The problems associated with the barter system are inability to make deferred payments, lack of common measure value, difficulty in storage of goods, lack of double coincidence of wants. You can read about the Monetary System – Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link.

Which of the following is a problem of barter system?

The problem with barter is that two individuals must have goods the other needs.

Which of the following is not the limitations of barter system?

What are the drawbacks of barter system class 12?

The various drawbacks of the barter system are as follows:

• Problem of double coincidence of wants. Double coincidence of wants implies that needs of two individuals should complement each other for the exchange to take place.
• Lack of common unit of value.
• Difficulty in wealth storage.
• Lack of standard of deferred payments.

What are the limitations of the barter system?

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. For example, if A has wheat and B has rice, then it is difficult to decide, how much wheat is needed to exchange with one kilogram of rice.

Are barter exchanges feasible in a large economy?

In a large economy, Barter exchanges are not feasible. Under the barter system, it is not feasible to carry forward one’s wealth. In a search for a person to exchange their surplus, in a barter system, a person would end up incurring very high costs.

Why is it difficult for people to store wealth under barter system?

Under barter system, it is difficult for people to store wealth for future use because: (a) Most of the goods (like wheat, rice, vegetables, etc.) do not possess durability, i.e. their quality deteriorates with passage of time. (b) Storage of goods requires time and efforts.

How does the binary barter system work?

Barter system can work only when both buyer and seller are ready to exchange each other’s goods. For example, A can exchange goods with B only when A has what B wants and B has what A wants. However, such double coincidence is very rare.