ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Bartering is the exchange of goods and services between two or more parties without the use of money. It is the oldest form of commerce. Individuals and companies barter goods and services between each other based on equivalent estimates of prices and goods.

Detailed explanation-2: -Money evaluates every commodity and service with a convincing value. A person who doesn’t want anything in exchange will also be ready to work for someone for money.

Detailed explanation-3: -If there were no money, we would be reduced to a barter economy. Every item someone wanted to purchase would have to be exchanged for something that person could provide. For example, a person who specialized in fixing cars and needed to trade for food would have to find a farmer with a broken car.

Detailed explanation-4: -Medium of Exchange Because everyone wants and values money, it is accepted by people everywhere in exchange for goods and services. With money, the problem of needing to find someone to barter with is eliminated, making it easier and more convenient for people to get the goods and services they want.

Detailed explanation-5: -Why might a company use barter rather than money to make a trade? Barter can enable two firms to trade when their cash flows are limited. no coincidence of wants exists between any two states.