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Limitations of barter trade

Answer Text:
Limitations of barter trade:
(i) requires double coincidence of wants: - it is difficult to find two people with the need for each other‟s product at the same time.
(ii) Lack of store of value/ perishability of some commodities: - some goods are perishable thus their value cannot be stored for a long time for future purposes e.g. one cannot store vegetables for exchange purposes in future.
(iii) Indivisibility of some commodities: -it is difficult to divide some products like
livestock into smaller units to be exchanged with other commodities.
(iv) Transportation problem: It is difficult to transport bulky goods especially when there is no faster means of transport.
(v) Lack of specialization: - Everyone strives to produce all the goods he or she needs due to the problem of double coincidence of wants.
(vi) Lack of a standard deferred payment: - The exchange of goods cannot be postponed since by the time the payment is made,
there could be fluctuation in value, demand for a commodity may not exist and the nature and quality of a good may not be guaranteed.