Explain the problem of double coincidence of wants faced under barter system. How has money solved it?
Solution:-
Double coincidence of wants means that " In barter system when a person has to sell his commodity he has to find another person who needs that same commodity and vice versa"
Example- Suppose a person has wheat and he wants to purchase rice. For this, he would have to find a person who has rice and is also willing to exchange rice for wheat.
Money solve this complex situation by acting as a medium of exchange that can be used for one and all commodities. For example, if one person (Arjun) who have rice wants wheat but the person (Aditya) who have wheat wants jute, not rice, then Arjun and Aditya can use money to buy wheat and jute respectively. Because money acts as the common medium of exchange.
Double coincidence of wants means that " In barter system when a person has to sell his commodity he has to find another person who needs that same commodity and vice versa"
Example- Suppose a person has wheat and he wants to purchase rice. For this, he would have to find a person who has rice and is also willing to exchange rice for wheat.
Money solve this complex situation by acting as a medium of exchange that can be used for one and all commodities. For example, if one person (Arjun) who have rice wants wheat but the person (Aditya) who have wheat wants jute, not rice, then Arjun and Aditya can use money to buy wheat and jute respectively. Because money acts as the common medium of exchange.