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What is an example of bartering?

1) Buying a car from a dealership
2) Giving out Halloween candy
3) Winning a free drink at a bar

1 Answer

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Final answer:

Bartering involves the direct exchange of goods or services without using money, such as a farmer trading strawberries for a tractor. Bartering can be limiting, which is why money was developed as a medium of exchange and store of value to facilitate easier trade.

Step-by-step explanation:

An example of bartering is when two parties exchange goods or services without the use of money. For instance, imagine a situation where a farmer has a fresh crop of strawberries and wants to obtain a tractor from another person. Instead of using money, the farmer offers a quantity of strawberries in exchange for the tractor. This direct trade of goods illustrates the barter system.

Bartering can sometimes be practical in small economies or close-knit communities; however, it has limitations, especially concerning perishable goods, the difficulty of entering into future contracts, and challenges related to the storage of value. This is one reason why societies developed a monetary system, where money serves as a widely accepted medium of exchange and a store of value, making trade more efficient and allowing for economic growth.

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