Management Notes

Reference Notes for Management

Barter system means

Barter system means

    1. Purchase of commodity with money
    2. Sale of commodity with money
    3. Purchase and sale of commodity with commodity
    4. None of the above

Correct Answer: Purchase and sale of commodity with commodity

 Answer Explanation

The correct answer is (c) “Purchase and sale of commodity with commodity.” The barter system is an ancient form of trade where goods are exchanged directly without the use of money.

In a barter system, individuals or communities exchange goods and services they possess for goods and services they need. A farmer can, for instance, exchange wheat directly for clothing with a tailor who requires wheat but has excess clothing, if they have an excess of wheat. It is through this direct exchange of goods that the barter system is unique.

Why the other options are not correct

a. Purchase of commodity with money

This option is incorrect because it describes a regular trade or purchase that uses money as a medium of exchange. Individuals use money to buy goods and services in conventional transactions. Barter, on the other hand, does not use money in exchange, relying instead solely on the exchange of goods or services for others.

b. Sale of commodity with money:

This option is incorrect also because it involves selling goods or services for money. A seller sells goods or services to a buyer for money. In contrast, the barter system does not use money at all; it emphasizes the exchange of commodities directly.

d. None of the above:

Option (c) describes the barter system accurately, so this option is not correct. Option (a) and option (b) involve transactions with money, which are not characteristic of a barter system, while option (c) explicitly represents the direct exchange of commodities, which is the essence of bartering.

Conclusion

In conclusion, the barter system is an historical method of trading in which goods and services are exchanged directly for other goods and services without the use of money. The answer (c) represents the essence of the barter system correctly.

 The options (a) and (b) are incorrect because they involve monetary transactions, whereas option (d) is incorrect because (c) accurately describes the barter system. The barter system is essential to understanding the evolution of trade and monetary systems throughout history.

Value of money is

Bibisha Shiwakoti

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