Question

(with Harvard style reference)

What is a barter? What factors made the barter inconvenient in the long run?

Answer 1

What is a barter?

In simpler terms, barter means exchanging goods/servicew with another set(s) of goods. In such transaction, money isn't involved.

What factors made the barter inconvenient in the long run?

Followings are the factors which made inconvenient for people in long run -

1. Difficulty in postponing payments: Payments which were supposed to be deferred, were made because of many reasons such as selection of good/service in future time, value of such goods/services in future etc.
2. Storage problem: In case of a barter system, one wasn't able to store the wealth beyond certain extent. Hence, it became inconvenient for people. This issue became even worse in case of parishable products.
3. Problem in measurement: Valuing things was a big question. You simple can't trade one thing in exchange of other becasue of valuation difference.
4. Divisibility issue: Measurement problem led to divisibility issue as how many sets of goods should be traded in exchange of one big product was unclear.
5. Problem while traveling: It became very inconvenient for people carrying their 'wealth' with them while traveling.
6. Issue in matching wants/needs: Now, if the person wants to sell something to someone, it wouldn't always be the case when the other person wants to buy the same very thing.

Note: No Harvard style reference was needed as it wasn't taken from any source.