Tag: Barter system

Economics

Barter system -Meaning, Advantages and Disadvantages

Written by Joshua

In a barter transaction, the parties involved exchange their goods or services for other goods or services they need.

This necessitates that both parties must have something that the other party wants.

For example, a farmer may exchange a sack of potatoes for a chicken from a poultry farmer. In this case, the farmer has a surplus of potatoes and wants to exchange them for something he needs, which is chicken.

Barter trade was mostly used in the olden days. In modern times, the use of money has made the barter system obsolete in most parts of the world.

Commerce

Inconveniences or Difficulties of Barter Trade

Written by Joshua

While barter trade may seem like a simple and straightforward system, it is associated with several difficulties or inconveniences that can make it a challenging mode of exchange.

These difficulties include the difficulty of common measure of value, difficulty in the double coincidence of wants, Difficulty in sub-division, difficulty in storing wealth, and difficulty in making deferred payments.