Question

State the constraints in the barter system. 

Answer 1

1. Lack of double coincidence of Wants: Unless two persons who have a surplus have the demand for the goods possessed by each other, the baiter could not materialize. If this “coincidence of wants” does not exist, Barter cannot take place.

2. Non – existence of a common measure of value: The barter system could not determine the value of commodities be exchanged as they lacked commonly acceptable measures to evaluate each and every commodity.

3. Lack of direct contact between producer and consumers: It was not possible for buyers and sellers to meet face to face in many contexts for exchanging the commodities for commodities.

4. Lack of surplus stock: The absence of surplus stock was one of the impediments to the barter system. If the buyers and sellers do not have a surplus then no barter was possible.