If “R” wants cloth, which “S” has, then “R” should have a commodity that “S” wants in exchange for the cloth. In the absence of such a coincidence of wants, there will be no exchange.
Identify the situation and choose the right option that will definitely help “R” and “S” to eliminate this situation.
a. Double coincidence of want, Exchanging commodity for commodity.
b. Double Coincidence of want, Credit on Commodity
c. Double coincidence of want, Loan on commodity.
d. Double coincidence of want, Money
Answer:
Answer by Student
The correct option is (d) Double coincidence of want, Money .
Detailed Explanation by Teachoo
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Let’s check all the options and see why they are correct or incorrect:
- Option (a) Double coincidence of want, Exchanging commodity for commodity - This does not eliminate the situation but rather describes it. Double coincidence of want is a situation where two people have goods that the other person wants. For example, if “R” wants cloth that “S” has, then “R” should have a commodity that “S” wants in exchange for the cloth. This is a rare and difficult situation as it requires both parties to agree on the value and quantity of the goods exchanged. This is incorrect :❌
- Option (b) Double Coincidence of Want, Credit on Commodity - This also does not eliminate the situation but rather complicates it. Credit on commodity is a situation where one person gives a good to another person on the promise of future payment or return. For example, if “R” wants cloth that “S” has, then “R” can take the cloth from “S” on credit and pay back later in cash or kind. This is a risky and uncertain situation as it involves trust and time between the parties. This is incorrect :❌
- Option (c) Double coincidence of Want, Loan on commodity - This also does not eliminate the situation but rather changes it. Loan on commodity is a situation where one person lends a good to another person for a certain period of time with or without interest. For example, if “R” wants cloth that “S” has, then “R” can borrow the cloth from “S” for a few days and return it later with or without some extra cloth. This is a temporary and limited situation as it does not transfer ownership or value of the goods. This is incorrect :❌
- Option (d) Double coincidence of want, Money - This eliminates the situation by introducing a common medium of exchange. Money is a generally accepted means of payment that can be used to buy and sell any good or service. For example, if “R” wants cloth that “S” has, then “R” can pay money to “S” and get the cloth. This is a simple and convenient situation as it does not require both parties to have goods that the other person wants. This is correct ✅.
Thus, option (d) is correct
