Question

Read the following dialogue between two people:

Sita:	I want 1 kg of potatoes.
Rani:	What will you give in exchange?
Sita:	I can give you 2 litres of milk in return for the potatoes.
Rani:	I don't need milk, I want a pair of shoe.

Which of the following problem is being faced by Sita and Rani in their exchange process?

Options

• Lack of double coincidence of wants

• Absence of common unit of value

• Lack of store of value

• Lack of standard of deferred payment

Answer 1

Lack of double coincidence of wants

Explanation:

Sita and Rani's problem is a lack of double coincidence of wants, which is a common issue in the barter system. In a barter system, an exchange is only possible if both parties want what the other has to offer. In this situation, Sita wants potatoes and is willing to offer milk, while Rani prefers shoes. Because their wants differ, the exchange cannot take place.