In the context of bartering, what does the term 'double coincidence of wants' refer to?

• A. Trade can occur only when both parties have identical goods.
• B. Both parties in a trade must want what the other has to offer.
• C. Bartering requires the use of money as a medium of exchange.
• D. Each party must have twice as many goods as the other.

Answer: (B)

Verified step by step guidance

1. Understand that bartering is a system of exchange where goods or services are traded directly without using money.
2. Recognize that the 'double coincidence of wants' is a key concept in bartering, which means that for a trade to happen, each party must desire what the other party is offering.
3. Note that this condition is necessary because, unlike money, goods are not universally accepted as a medium of exchange, so both parties need to have matching wants.
4. Realize that this requirement can make bartering inefficient, as it limits the opportunities for trade to situations where both parties' needs align perfectly.
5. Summarize that the 'double coincidence of wants' refers to the necessity that both traders want what the other has, enabling a direct exchange of goods or services.