Why has barter been replaced by the use of money in Nigeria?

1. Less possibility or lack of coincidence of wants or double coincidence of wants. 2. Long trade was very expensive in barter system as goods and services were not easily mobile.

Why is money used instead of bartering?

Money has value because it is an exchange medium that people understand and accept as such. When everyone accepts that a bill or a coin has value, people can use it as a form of payment to purchase goods or services. Bartering also has an advantage because even people without money can get something they need.

Which economic system uses bartering rather than money?

A traditional economy is a system that relies on customs, history, and time-honored beliefs. Tradition guides economic decisions such as production and distribution. Traditional economies depend on agriculture, fishing, hunting, gathering, or some combination of the above. They use barter instead of money.

How did money solve some of the problems of barter?

Money solves the problems that the barter system creates. (We will get to its definition soon.) First, money serves as a medium of exchange, which means that money acts as an intermediary between the buyer and the seller.

What advantage does a money economy have over a barter economy?

The main advantage of money over barter is that money is always going to be usable. Barter is very often not possible. This is because of the need for what is called a “coincidence of wants” (sometimes called a “double coincidence of wants”). Think about how barter works.

Why is barter less efficient than using money?

A barter exchange tends to be less efficient that exchanges involving money. In a barter exchange one good is traded directly for another. With money, more resources can be used for production and fewer are needed for trading.

How did trade by barter system encourage introduction of money?

Thus barter economy has given place to money economy. With the introduction of money, the process of direct exchange of goods for goods was given up. Money can be conveniently stored and a person can save a part of his income for future use. Thus money overcomes all the disadvantages of barter system of exchange.

How does money solve the problem?

Money solves the problem of this double coincidence by acting as a medium of exchange. As money is uniform and more durable it makes the transactions easier and fulfills the desire of the other party rather than compromising on the material.

What is trade by barter?

barter, the direct exchange of goods or services—without an intervening medium of exchange or money—either according to established rates of exchange or by bargaining. Barter is common among traditional societies, particularly in those communities with some developed form of market.

What are the disadvantages of trade by barter?

Barter system involves various difficulties and inconveniences which are discussed below:

• Double Coincidence of Wants:
• Absence of Common Measure of Value:
• Lack of Divisibility:
• The Problem of Storing Wealth:
• Difficulty of Deferred Payments:
• Problem of Transportation:

What are the advantages and disadvantages of barter trade?

Advantages and disadvantages of Barter Some of the advantages of Barter system are: It is a simple system free from the complex problems of the modern monetary system. The problems of international trade, like foreign exchange crisis and adverse balance of payments, do not exist in the barter system.

What are the problem of trade by barter?

The five main difficulties found in barter system are as follows: 1. Double Coincidence of Wants 2. Lack of a Standard Unit of Account 3. Impossibility of Subdivision of Goods 4.

What are the drawbacks of the trade by barter system?

For a clearer explanation of the trade by barter system, i recommend you watch the video embedded below: The following are the drawbacks of trade by barter. 1. There was the problem of inconvenient wants. This is the difficulty of bringing together two people, each of whom wants what the other has to exchange.

How did trade and barter influence the development of money?

Utilizing money as the medium for trade simplified transactions significantly. Trade and barter were precursors to the monetary system used in today’s society. Although trade and barter may seem almost archaic, they were the business solutions for people who lived before the convenience of credit card processing.

What is the difference between bartering and exchange of money?

Bartering involves a direct trade for goods and services. Although some aspects of this transaction are similar to the exchange of money, bartering required time as people hammered out the terms of the deal. Utilizing money as the medium for trade simplified transactions significantly.

What goods are exchanged in barter goods?

In barter goods are exchanged for other goods. A rice farmer, for instance, who only produces rice, has only rice to exchange for, say table and chairs. To make the trade, he will have to go round the neighborhood looking for a carpenter who makes table and chairs and who needs rice and will take it in exchange of his table and chairs.