WAEC Economics 2013 Theory — Question 13

Model answer

(a) Problems of a barter economy: (i) Problem of double coincidence of wants. (ii) Non-divisibility of some commodities. (iii) No common standard/unit for deferred payment. (iv) No common unit of account. (v) Problem of storing wealth (some commodities are perishable). (vi) Non-portability of some commodities. (b) Money serves as a medium of exchange and there is no need for a coincidence of wants any more (money is generally accepted, unlike specific commodities). Money serves as a standard for deferred payment. Money serves as a unit of account. It is made of durable materials and can be used as a store of wealth. Money's essential attribute of portability solved the problem of non-portability found in barter.