Question 29
Money and InflationOne disadvantage of trade by barter is that
- A.people are happier when they exchange the same quantities of goods through the medium of money rather than by barter
- B.the person wishing to buy good X may not have good Y which is what the other person wants
- C.one person must always be cheated when trade takes place by barter
- D.it increases the initial cost of producing goods
Show the answer and explanation
Answer: B (the person wishing to buy good X may not have good Y which is what the other person wants)
Explanation
Barter needs a double coincidence of wants: each trader must have exactly what the other wants, which is often not the case.