Rajesh is a weaver and is looking for food for his family. He approaches Shyam who is a farmer and offers to exchange clothes in return for wheat. However, Shyam says that his family needs shoes, not clothes. Which shortcoming of the barter system is being highlighted in this case?
Rajesh is a weaver and is looking for food for his family. He approaches Shyam who is a farmer and offers to exchange clothes in return for wheat. However, Shyam says that his family needs shoes, not clothes. Which shortcoming of the barter system is being highlighted in this case?
Solution
Option 1 -> Rajesh wants wheat but Shyam doesn't want clothes in return, showing absence of mutual needs.
Option 2 -> This refers to difficulty in determining exchange ratios, not applicable here.
Option 3 -> This relates to preserving wealth over time, not relevant to this scenario.
Option 4 -> This concerns credit transactions and future payments, not the issue here.
Hence, Option 1: Lack of double coincidence of wants -> In a barter system, exchange can only occur when both parties simultaneously want what the other offers. Here, Rajesh wants wheat from Shyam, but Shyam needs shoes (not clothes). Since their wants don't coincide, no direct exchange is possible. This fundamental limitation of barter led to the development of money as a medium of exchange, which eliminates the need for this double coincidence -> correct
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