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
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
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

Latest Articles

Average Acceleration Calculator

Average acceleration is the object's change in speed for a specific given time period. ...

Free Fall Calculator

When an object falls into the ground due to planet's own gravitational force is known a...


In Mathematics, the permutation can be explained as the arrangement of objects in a particular order. It is an ordered...

Perimeter of Rectangle

A rectangle can be explained as a 4-sided quadrilateral which contains equal opposite sides. In a rectangle

Perimeter of Triangle

A three sided polygon which has three vertices and three angles is called a triangle. Equilateral triangle...