What is barter? What is a double coincidence of wants? How does the existence of money affect barter?
What will be an ideal response?
Barter is the direct exchange of one good or service for another. Barter is inefficient because it requires a "double coincidence of wants," that is, the good one person offers for exchange must be the good the trading partner wants and the trading partner's good must be what the first person wants. The existence of money means that we do not need to engage in barter. Instead, we can sell a good or service for money and then use the money to purchase another good or service we desire. There is no necessity for the "double coincidence of wants" because the seller is willing to accept money from any buyer.
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The figure above shows the market for private elementary school education in Chicago. There is no external cost of private elementary education. If the government does not intervene in this market, the equilibrium price of private education is
A) $12,000. B) $16,000. C) $20,000. D) $4,000. E) $6,000.
The gold standard period was
A) up until the first world war. B) between the first and second world wars. C) following the second world war until 1970. D) between 1954 and 1970. E) between 1814 and 1865.
Although economists generally favor a negative income tax, there is little political support for it
a. True b. False Indicate whether the statement is true or false
A resource-extracting firm will tend to operate where
a. Marginal revenue equals marginal cost b. Average revenue equals average cost c. Marginal revenue exceeds marginal cost d. Total revenue equals total cost e. Marginal cost exceeds marginal revenue