Author Question: What is barter? What is a double coincidence of wants? How does the existence of money affect ... (Read 104 times)

asan beg · **on:** Jun 29, 2018

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

What will be an ideal response?

Question 2

Which of the following statements best describes a consumer's budget line?

A) It shows all combinations of goods among which the consumer is indifferent.
B) It shows the limits to a consumer's set of affordable consumption choices.
C) It shows the desired level of consumption for the consumer.
D) It shows the consumption choices made by a consumer.

brittiany.barnes · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Barter is the direct exchange of one good or service for another. Barter is inefficient because it requires a double coincidence of wants, that is, the good one person offers for exchange must be the good the trading partner wants and the trading partner's good must be what the first person wants. The existence of money means that we do not need to engage in barter. Instead, we can sell a good or service for money and then use the money to purchase another good or service we desire. There is no necessity for the double coincidence of wants because the seller is willing to accept money from any buyer.

Answer to Question 2

B