What are the difficulties of barter system?

Answer 1

Here are some of them:

Missing double coincidence of wantsBarter will only take place if we both have something that the other person wants.

Example: I want an iPod, and offer babysitting services. You have a spare iPod, but have no children; you want a TV.

With money, I can sell babysitting to a third party and trade you money for the iPod, and you give those money to a fourth party for the TV.

Without money, the babysitting/iPod exchange would either not happen, or be longer and more complicated as we try to barter tomatoes, poultry, bicycles or whatever we can get hold of towards our ultimate goal.

Many goods are indivisibleUnlike money, many goods cannot be split up in smaller parts to match an offer.

Example: I want an iPod, and offer babysitting. You have a spare iPod and need babysitting services, but only for one or two nights, not enough for the babysitting to be a fair trade for the iPod.

Again, we are stuck with either no trade or a potentially very long and convoluted series of intermediate barters.

No common metric for valueInstead of valuing an iPod to an amount of money, you must be prepared to estimate its value in number of cows, haircuts, televisions and every other good and service in existence.

In a modern society you would end up with millions of "prices" on every product, as it is far from obvious how a valuation in cows translates to a valuation in bicycles.

Difficult to store wealthSaving is harder when much of what you receive is perishable (ex. tomatoes), bulky (ex. cabinet, bicycle) or require dedicated care (ex. live cattle).

Answer 2

There are some very serious problems with Barter;

(1) You have to look for people who want to exchange what you have for what you want,

(2) Next they may not be willing to exchange the volume you want,

(3) Two people may not have the same valuation of a commodity.

Answer 3

1. lack of double coincidence of wants

2. lack of common measure of value

3. lack of store of value

4. indivisibility of goods

5. lack of deferred payment

6. difficulty in transfer of wealth

Answer 4

A barter system is difficult and often impractical for several reasons:

1) A lack of the "double coincidence of wants" - one party must be seeking the exact item or service that the other party has, at the same time it is available.

2) An absence of a common measure of value or medium of exchange - there is no comparative value scale as determined by the supply or the demand

3) Indivisibility of goods - some goods such as livestock or manufactured items cannot easily be divided to provide fractional bartering items

4) Normally requires the direct contact between producer and the consumer, or their agents, at a specific time and place.

5) A lack of surplus stocks, such that increased demand cannot always be met.

6) Difficulties in transportation, or transfer of wealth (property) from one owner to another.

7) There is no store of value separate from masses of disparate goods.

8) There is insufficient provision for lending or borrowing.

9) The collection of transfer taxes is cumbersome, difficult, or impossible.

Answer 5

"Hello, Ivan. How are things in Moscow? Are you still selling tractors?"

"Da. How many do you want?"

"Fifteen. I can trade them to local farmers for food."

"How do I get them to you?"

"By boat."

"Nyet. The boat captain doesn't want a tractor."

"Would he take vodka?"

"Da, he would, but I don't have vodka."

"Can you trade a tractor for vodka?"

"Da, I know a man in Kiev,who might want a tractor. But one tractor is worth a lot of vodka. How do I get it back from Kiev?"

"You trade vodka for the use of a truck."

"I'd still have more vodka than I can use."

"Then store it"

"The only man I know who rents warehouses doesn't drink. What are you going to trade for these 15 tractors anyway?"

"An airplane."

"I don't want an airplane. And anyway, it's not enough. I want a beach property near Brisbane and two crates of single malt scotch."

Compare this.

"Hello, Ivan. How are things in Moscow? I'm looking for 15 tractors."

"I can give them to you for 8.5 million pounds sterling, transport included."

"I'll offer 7 million and I'll pay the transport."

"Done"

Answer 6

These are the main difficulties of barter system:

• Problems of proper measurement
• Identify to those people who need the same goods that we want to sale
• More time consuming

Answer 7

problems of bartar trade

Answer 8

exchange rate

Answer 9

wast of time