goods and products exchange

Bartering(Barter)

?What Is Barter

Barter is an act of trading goods or services between two or more parties without the use of money —or a monetary medium, such as a credit card. In essence, bartering involves the provision of one good or service by one party in return for another good or service from another party.

barter:

 the direct exchange of goods or services—without an intervening medium of exchange or money—either according to established rates of exchange or by bargaining. It is considered the oldest form of commerce. Barter is common among traditional societies, particularly in those communities with some developed form of market. Goods may be bartered within a group as well as between groups, although gift exchange probably accounts for most intragroup trade, particularly in small and relatively simple societies. Where barter and gift exchange coexist, the simple barter of ordinary household items or food is distinguished from ceremonial exchange (such as a potlatch), which serves purposes other than purely economic ones.

A simple example of a barter arrangement is a carpenter who builds a fence for a farmer. Instead of the farmer paying the builder $1,000 in cash for labor and materials, the farmer could instead recompense the carpenter with $1,000 worth of crops or foodstuffs.

:terms of trade

relationship between the prices at which a country sells its exports and the prices paid for its imports. If the prices of a country’s exports rise relative to the prices of its imports, one says that its terms of trade have moved in a favourable direction, because, in effect, it now receives more imports for each unit of goods exported. The terms of trade, which depend on the world supply of and demand for the goods involved, indicate how the gains from international trade will be distributed among trading countries. The concept is also applied to different sectors within an economy (e.g., agricultural and manufacturing sectors).

Understanding Bartering

Bartering is based on a simple concept: Two individuals negotiate to determine the relative value of their goods and services and offer them to one another in an even exchange. It is the oldest form of commerce, dating back to a time before hard currency even existed.

While the current senior generation bartered with the limited goods they had on hand (i.e., produce and livestock) or services they could personally render (i.e., carpentry and tailoring) to someone they knew, today most Americans have access to a nearly unlimited source of potential bartering partners through the internet.

How Individuals Barter

When two people each have items the other wants, both parties can determine the values of the items and provide the amount that results in an optimal allocation of resources.

For instance, if an individual has 20 pounds of rice that they value at $10, they can exchange it with another individual wh needs rice and who has something that the individual wants that's valued at $10. A person can also exchange an item for something that the individual does not need because there is a ready market to dispose of that item.