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Unformatted text preview: Place Supermarket The Mall Service NYSE eBay 2 Barter—considerations • Barter requires a double coincidence of wants —each party to the exchange must want what the other has to trade. – Transactions costs —the costs of making an exchange—are high in barter exchanges. – Money reduces the transactions costs because it does not require a double coincidence of wants. • In barter, the price of one good in terms of the other is called the relative price . It is the rate of exchange between the two goods. Bartering Boom • The Internet has reduced the transaction costs of bartering. • Web sites like BigVine help individuals and small businesses barter online. • Sites offer a diverse range of products and services – from accounting to car repair, and restaurant meals to advertising space....
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This note was uploaded on 01/01/2011 for the course ECON 101 taught by Professor E during the Spring '10 term at American College of Computer & Information Sciences.
- Spring '10
- Money Markets