Which of the following problems is are associated with the barter system of exchange 1 It requires t...........

Economic Affairs Introduction

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Which of the following problems is/are associated with the barter system of exchange?

1. It requires the double coincidence of wants.

2. It is difficult to use in large economies.

3. It is difficult to carry forward perishable wealth under barter system.

Select the correct answer using the code given below.

1 and 2 only

2 only

1 and 3 only

1, 2 and 3

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Explanation:

Statement 1 is correct. The first difficulty in barter is to find two persons whose disposable possessions mutually suit each other's wants. This is known as the problem of double coincidence of wants.

Statement 2 is correct. It is difficult to use in large economies as people have to incur huge costs in searching for suitable person to exchange their surpluses.

Statement 3 is correct. It is difficult to carry forward the perishable wealth under barter system. For example the commodity that a person wants to exchange may be perishable such as food grains.