Which of the following is an advantage that money has over bartered goods?

• A. Money serves as a medium of exchange, making transactions more efficient.
• B. Money eliminates the need for a double coincidence of wants.
• C. Money cannot be divided into smaller units for transactions.
• D. Money is less durable than most bartered goods.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of barter and its limitations. In a barter system, goods and services are exchanged directly without using money. This requires a 'double coincidence of wants,' meaning both parties must want what the other offers at the same time.
2. Step 2: Recognize the role of money as a medium of exchange. Money facilitates transactions by acting as an intermediary, which means people can sell goods or services for money and then use that money to buy what they need from others.
3. Step 3: Identify the advantages of money over barter. Money eliminates the need for a double coincidence of wants, making transactions more efficient and flexible.
4. Step 4: Evaluate the incorrect options. For example, money can be divided into smaller units (like cents), and it is generally more durable than many perishable bartered goods, so these statements are false.
5. Step 5: Conclude that the key advantage of money is its function as a medium of exchange, which simplifies and speeds up trade compared to barter systems.