A major problem of a barter system is
1. potential buyers finding items that individual sellers will accept
2. The absence of money.
3 the allowance of only one medium of exchange.
4.The absence of a medium of exchange.
The correct answer and explanation is:
The correct answer is 1. potential buyers finding items that individual sellers will accept.
In a barter system, goods and services are exchanged directly for other goods and services without the use of money. A major problem with this system is what is known as the “double coincidence of wants.” This means that in order for a trade to occur, both the buyer and the seller must have something the other wants. This can make finding suitable trades difficult, as the chances of two individuals having mutually desirable goods at the same time are relatively low.
For example, if a person wants to trade a cow for a bag of rice, the person with the rice may not want a cow, or may not need one. Thus, they are unlikely to agree to the exchange. The difficulty in matching these needs makes bartering time-consuming, inefficient, and often impractical.
Additionally, the absence of money in a barter system limits the flexibility and scope of trade. Money serves as a universally accepted medium of exchange, making transactions smoother by removing the need for a double coincidence of wants. With money, individuals can trade goods or services for currency, which can then be used to purchase whatever they need, irrespective of whether the seller wants what the buyer has to offer in exchange.
While the absence of money is a problem in a barter system, it is the difficulty in finding someone who wants exactly what one has and has what one wants in return that primarily hinders the system’s effectiveness. This challenge is avoided in modern economies by using money, which simplifies the process of trade and allows people to specialize in different goods and services.