A dairy farmer wants to sell her milk and use the proceeds to buy rice. She approaches several rice sellers,…

Question

A dairy farmer wants to sell her milk and use the proceeds to buy rice. She approaches several rice sellers, but none of them want milk in return. (i) Explain the specific difficulty the farmer faces in completing this exchange. (ii) How does the use of money resolve this difficulty?

Accepted Answer

## Model Answer (i) The farmer faces the problem of **double coincidence of wants** — she needs a rice seller who also wants milk, but none of them do. (ii) Money acts as a **medium of exchange** — she can sell milk for money and use that money to buy rice, eliminating the need for double coincidence of wants. Source: Money and Credit, Medium of Exchange --- ## Explanation This is technically a 1-mark question but has two sub-parts, so keep each answer to one short line. Examiners look for the exact term **"double coincidence of wants"** for part (i) and **"medium of exchange"** for part (ii). Always use these textbook terms — partial credit may be awarded for explanation alone, but the terms are essential for full marks.

Social Science (087) — AI-generated practice question