Barter trade and its merits

BARTER TRADE

This refers to exchange of goods and services for goods and services.this trade has several drawbacks.

1. It is difficult to estimate the value of one good with another
2. It depended on double coincidence of wants between traders.
3. Perishability of some commodities tomatoes,fruits and milk could go bad very easily hence could not be stored.
4. Divisibility aspect was a problem i.e. it wasn’t easy to divide some commodities into smaller goods.
5. Portability – it was difficult to transport goods since some were heavy and bulky.

MERITS OF BARTER TRADE

1. Buyers and sellers are able to get the goods and services they require immediately after the exchange.
2. A country/person is able to dispose off the surplus.
3. Promotes social relations among the trading communities,through negotiations
4. Promotes specialization in the production of goods and services i.e. concentrate on what you can offer best.