Store of value. 2 CONTENTS 1.

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. It was difficult to compare 2 litres of milk with 2 kgs of onions. Lack of divisibility. Another disadvantage of the barter system is the lack of a common measure of value. Tags: Topics: Question 6 . As there is no common measure of value, the ratio will be arbitrarily fixed according to the intensity of reciprocal demand. Impossibility of Subdivision of Goods : Another problem faced under the barter system for exchange of goods was impossibility of subdivision of goods without loss of their value. Lack of Common Measure of Value. A barter economy lacks a common medium of exchange and also a standard unit of account in which prices could be measured and quoted.

Lack of a Standard Unit of Account . A man who has a horse assigns the value of` one horse as two cows. No difficulties of storing wealth III. Similar questions. 1.

Lack of double coincidence of wants II. What are its drawbacks? Difficulty In Deferring Payments. Lack of a common measure of value. You can read about the Monetary System Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link. Absence of Common Measure of Value: Even if it is possible to have the double coincidence of wants, the absence of a common measure of value creates great problem because a lot of time is wasted to strike a bargain. (v) Lack of divisibility. Indivisibility of certain goods. Lack of Common Measure of Value Even if the two people who want each others goods meet by coincidence, the problem arises in deciding the proportion in which the goods should be exchanged. Barter system is very simple, without any complications and suitable in International trade. Indivisibility of commodities (a) I and II is correct (b) I and IV is correct (c) I, III and IV is correct (d) All are correct Answer: (c) I, III and IV is correct. Difficulty in storing wealth. There being no common measure of value, the rate of exchange will be arbitrarily fixed according to the intensity of demand for each others goods.

VI. The problem of storage: There was the problem of storage under Barter exchange because most of the commodities exchanged were agricultural in nature.

Lack of common measure of value

All of these

answer explanation . Lack of double co-incidence of wants - Double co-incidence of wants indicates need of each other's goods and willingness to accept it. (2) Lack of Divisibility: Commodities and services cannot be easily sub-divided to affect an evenly valued exchange. Barter dollars substitute indivisible goods with incremential units of value. Alternatively, economic exchanges without the medium of money are referred to as barter system exchange. An economy based on barter system exchange (i.e., exchange of goods for goods) is called C.C. Economy, i.e., commodity for commodity exchange economy. In such an economy, a person gives his surplus good and gets in return the good he needs. Ungraded . Following is the overview of the various advantages of money; 1. Difficulty in storing value. SURVEY . 2) Absence of common measure of value: In the barter system, there is no common measure (unit) of value. Lack of common measure of value means simply that the value of certain goods or services may not be defined precisely in terms of something else. For example, how much milk is a chicken worth? Lack of a Common Measure of Value: The biggest problem in the barter exchange was the lack of common measure of value i.e., there was no such commodity in lieu of which all commodities could be bought and sold. (iii) Lack of Common Measure of Values: Under barter system the values of commodities were expressed in terms of some other commodities. Lack of common measure of value: Even if two persons meet by coincidence who want ech others good by coincidence,the problem arises as to the prportion in hich the two goods should be exchanged. Difficulty in storing value.

Lack of double coincidence of wants II. Contractual payments or future payments would certainly be very difficult under barter system of exchange. It isn't easy to establish the value of one commodity compared to another. Even if two people are ready to exchange their goods, the problem arises in what proportion the goods are to be exchanged. Common measure of value IV. Even if buyer and seller of each other commodity happen to meet, the problem arises in what proportion the two goods are to be exchanged. Absence of a Difficulties of Barter System . 2. (No Standard quality of deferred payment) Problem 7 -Barter System Lack of Divisibility Example Suppose a Farmer has 100 Mangoes He wants to buy a horse But horse owner is willing to sell it only for 200 mangoes Can Farmer buy half horse with his 100 mangoes? Was this answer helpful? Even if two people are ready to exchange their goods, the problem arises in what proportion the goods are to be exchanged. 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. (iii) Lack of Common Measure of Values: Under barter system the values of commodities were expressed in terms of some other commodities. Absence of common measure of value: In the barter system, there is no common measure (unit) of value. You can read about the Monetary System Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link. Following is the overview of the various advantages of money: 1.Removal Of Barter System Difficulties :- Introduction of money has helped in overcoming the difficulties of barter system such as the need for double coincidence of wants, lack of common measure of value, lack of divisibility, the problems of transportation and storage of wealth. For example, A can exchange goods with B only when A has what B wants and B has what A wants. Report an issue . What is Barter system? 6: Which of the following is not a problem of barter system? Lack of common measure: Another difficulty which arises under the system of barter is the absence of common measure which can help in the estimation of relative values of the two commodities. Lack of Double Coincidence of Wants: A barter system can only work when both parties are ready to exchange the products. Double coincidence of wants. Answer (1 of 38): The transaction cost of doing barter is prohibitively high. Score: 5/5 (37 votes) . Its Drawbacks are: Lack of double coincidence of wants. Absence of common measure of value. For instance, if a person have cow and other have goat, and 1st want to exchange cow after receiving two goats, and other is not agree from 1st because there is no common measurement of goods. 1000 Mangoes 1/2 Horse Farmer Horse Barter System Not Possible As Horse is not Divisible (ii) Lack of Common Measure ofValue: Different commodities are of different value. Lack of common measure In barter system, there is no common measurement for exchangeable goods. Find out the odd one: 1. In barter system there is no wastage which occur in monetary economy. 1. 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.

(3) Lack of Common Measure of value: Barter systems lack a common measure of value. 2.Drawbacks of Barter System of Exchange. there are certain commodities which can be divided without loss of value. SDRs is a. Barter dollars provides a common unit of measurement. Another difficulty under the barter system relates to the lack of a common unit in which the value of goods and services should be measured. Even if the two persons who want each others goods meet by coincidence, the problem arises as to the proportion in which the two goods should be exchanged. Barter system had many deficiencies like I. 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. No difficulties of storing wealth III. Barter system is not feasible in large economies. For example, if A has wheat and B has rice, then its difficult to decide, in exchange for 1 kg of wheat how much rice is needed. 3.Lack of sub-division: The third serious difficulty of barter system is the lack of sub-division of commodities. 1. It isn't easy to establish the value of one commodity compared to another. Unemployment

Store of value

Difficulty in storing wealth (or generalised purchasing power): It is difficult for the people to 2. In this system the shortage of foreign exchange and imbalance in trade does not occur.

Lack of common measure of value - In the absence of common measure of value or a unit of account, it was difficult to calculate the values of the goods exchanged. Lack of double co-incidence of wants - Double co-incidence of wants indicates need of each other's goods and willingness to accept it. ClearTax serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India. 2) Absence of common measure of value: In the barter system, there is no common measure (unit) of value. Money as a medium of exchange was not used in the early history of mankind. For instance, a man has horse with him and the other cow and both are willing to trade. Under the barter system, if it is possible to get 2 kilograms of onions for a piece of cloth, the price of cloth in terms of onions will be 2, i.e., consuming one unit of cloth requires giving up 2 kilograms of onions. 3. (ii) In this situation, it is difficult to decide in what proportions are the two goods to be exchanged.

What are disadvantages of the barter system Get the answers you need, now! Lack of a common measure of value. Lack of Common Measures of Value: In the barter system, all commodities are not of equal value, and there is no standard measure of the cost of goods and services. Person "A' has cloth and he wants rice in exchange and the person `B' has wheat and he wants milk in exchange. Lack of a Common Measure of Value: Another difficulty under the barter system relates to the lack of a common unit in which the value of goods and services should be measured. Q. A system of exchanging goods without using money is known as barter system. 3. 2. Unit of account. VI. e.g. 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.

Barter system has the defect of (a) Goods exchanged are of inferior quality ( ) (b) Goods cannot be exchanged for services ( ) (c) Lack of common measure of value ( ) (d) None of the above ( ) 16. Lack of 2. Indivisibility of commodities a) I and II is correct b) I and IV is correct c) I, III and IV is correct d) All are correct Answer: c) I, III and IV is correct. There is no common measure of value in th barter system. However, such double coincidence is very rare. Lack of double co-incidence of wants was one of the important limitations of Barter system. The price of anyone good has to be expressed in terms of another. Lack of standard of deferred payment.

Person "A' has cloth and he wants rice in exchange and the person `B' has wheat and he wants milk in exchange. (d) Low value of money ( ) 15.