Exchange

Exchange means mutual transfer of wealth between two parties. Exchange may be of two forms:

(a) Barter Exchange
(b) Purchase and Sale Exchange

Barter Exchange


It is direct exchange of one commodity for another. The system prevailed in primitive stage. People experienced a number of inconveniences in barter; therefore, it was soon given.

Purchase and sale Exchange


This is the system in which all transactions are done in exchange for money. Things are purchased and sold in exchange of common medium called money. This system removed the inconveniences of the Barter system.


    


Advantages of Exchange

1. It enables people and countries to utilize their best resources.

2. It enables us to consume commodities which we will not have consumed otherwise.

3. It increases productive capacity of each worker. He can adopt an occupation for which he has inclination.

4. It has enlarged the area of the market and has led to large scale production.

5. Both the parties gain utility by exchange.




Next Chapters

Estimating Procedure
Costing
Difference between Estimating & Costing
Depreciation & Obsolescence
Material Cost Calculation
Calculating Labor Cost
Direct and Indirect Expenses
Component Cost
Machine Shop Estimating
Forging and Forging Types
Starting an Organization
Welding Cost Estimation
Jigs and Fixtures
Forecasting
Qualities of an Entrepreneur
Starting Small Scale Industries
Budget and Budgetary Control
Supply & Law of Supply
Exchange and Barter Exchange
Classification of Market
Money and Types of Money
Trade Cycle
Break Even Analysis
Financial Management
Profit
Pricing
 


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