Barter

• Barter is the exchange of goods and services without the use of money
• Bartering only works if there is a double coincldence of wants
• A double of coincldence of wants is two people who want what the other has to offer
• Advantages of barter are:

  1. People can acess goods that they do not produce themselves.
  2. There is no need for money
  3. surplus production can be traded
  4. People can specialise in producing one or a small number of goods
• Surplus Production - When the total output of a country is greater than the total demand for its goods and services.
• Disadvantages of bartering:

  1. Rate of exchange
  2. Some goods are not divisible
  3. some goods are bulky
  4. store of value
  5. Trade was time consuming