Answer:
(i) Lack of double coincidence of wants - Here, a seller has to find out a person who wants to buy seller's goods and at the same time who must have what the seller wants. This is the main drawback of barter exchange. (ii) Absence of common measure of value - When thousands of articles are produced and exchanged, these will be unlimited number of exchange ratios. Absence of a common denominator in order to express exchange ratios create many difficulties. (iii) Lack of divisibility - If a person wants to purchase wheat equal to the value of half of his horse, he cannot do so without killing his horse. Thus lack of divisibility makes barter exchange impossible. (iv) Difficulty in storing wealth - Holding of stocks of goods like cattle, wheat, potatoes, etc. involve costly storage and deterioration. (v) Lack of satisfactory unit to engage in contracts - It is difficult to engage in contracts which involve future payments due to lack of any satisfactory unit.
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