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A problem with barter exchange when there are many goods is that in a barter system

A) transactions costs are minimized.
B) there exists a multiple number of prices for each good.
C) there is only one store of value.
D) exchange of services is impossible.

User Cronay
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Final answer:

In a barter system, the main problem with many goods is that multiple prices exist for each good, leading to high transaction costs and inefficiencies. Money serves as a medium of exchange and a store of value, solving these issues.

Step-by-step explanation:

A problem with barter exchange when there are many goods is that in a barter system there exists a multiple number of prices for each good. The barter system involves the direct exchange of goods without the use of money, which can lead to high transaction costs and the requirement for a double coincidence of wants; this means each trader has what the other desires.

Moreover, barter transactions can complicate the process of storing value since some goods are perishable and may not retain value over time, unlike money.

Furthermore, the barter system can be inefficient in modern economies with extensive division of labor. It tends to constrain the growth of economies by consuming time in arranging trades that could be used in more productive or leisure activities. Money simplifies these transactions by acting as a medium of exchange, broadly accepted for goods, services, and labor, and as a store of value, facilitating savings and future spending, even when some inflation is present.

User Juananruiz
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