McConnell_Brue_Chapter02

The process of barter is inefficient because a

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Unformatted text preview: of barter is inefficient because a coincidence of wants must exist in order to conduct a trade. Stated otherwise, two persons each having what the other wants must encounter one another simultaneously for barter to occur and the sheer probability of this occurring is unlikely. 15 Our nation was once a barter economy and the location of trade centers in areas with access to waterway transportation serves as evidence of how barter trade centers evolved. Money was eventually introduced and the use of barter in our nation fell by the wayside. Interestingly, cities located along waterways have continued to persist. One reason for this persistence is due to the fact that waterways continued to represent an efficient way of transporting resources and as such many of our early trade centers evolved into production centers. 7 Chapter 2: The Market System and The Circular Flow Slide 16 The final critical component of a market system we examine is the existence of an active, but limited, government. Active, but Limi...
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.

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