Q.Explain the difficulties of the barter system.

Barter worked reasonably well in small, simple communities, but broke down as the range of goods traded and the scale of exchange grew.

The barter system — direct exchange of goods for goods — suffered from several serious difficulties as trade grew beyond the smallest, most self-sufficient communities:

1. Lack of double coincidence of wants — an exchange could occur only when each party wanted exactly what the other offered, at the same time, which grew increasingly rare as the variety of goods produced widened.
2. Lack of a common measure of value — barter has no single unit to express and compare the value of unlike goods, so every pair of goods needed its own separately negotiated exchange rate.
3. Indivisibility of goods — many goods (a cow, a plough) cannot be split into smaller units without destroying their value, blocking a fair exchange for several smaller-value goods.
4. Lack of a store of value — many barter goods (foodgrain, milk) are perishable and cannot be stored, so a surplus could not reliably be saved for a later purchase.
5. Lack of a standard for deferred payments — no reliable way existed to fix a future obligation such as a loan or rent, since the relative value of the goods involved could itself change before the obligation was honoured.
6. Difficulty of transport and transfer — moving bulky or perishable barter goods over distance to complete a trade, or to transfer value to another person, was slow, costly, and often impractical.

Every one of these difficulties disappears once a generally acceptable medium of exchange — money — is introduced, which is exactly why a barter economy naturally gives way to a money economy as trade grows in scale.

Naming only the 'double coincidence of wants' and stopping there — a complete answer is expected to cover all the distinct difficulties, since board examinations typically mark this as a multi-point explanation.