How does money solve the problem of double co-incidence of wants? Explain with an example of you own.

Q.2:- How does money solve the problem of double co-incidence of wants? Explain with an example of you own.

 

Answer:-

Double coincidence of wants is an essential feature in a barter system where goods are directly exchanged without the use of money. Bill on other hand in an economy where money is in use, by providing the crucial intermediate step, it eliminates the need for double coincidence of wants.

A person holding money can easily exchange if for any commodity in service that he or she might want. e.g., it is no longer necessary for shoemaker to look for a farmer who will buy these shoes and at the same time sell him rice. All he has to do is find a buyer for his shoes. Once he has exchanged his shoes for money he can purchase rice or any commodity in the market.