The correct option is When what a person desires to sell is exactly what the other wishes to buy..
Explanation
The concept of 'double coincidence of wants' is the foundational prerequisite for a Barter System, where goods are exchanged directly for other goods without the use of money as an intermediary.Detailed Analysis
- Definition: It describes a situation where two economic agents possess goods that the other desires. For a transaction to occur, the wants of both the buyer and the seller must coincide simultaneously.
- Mechanism: In a barter economy, if an individual wants to exchange a specific commodity (e.g., shoes) for another (e.g., wheat), they must find a counterparty who not only possesses wheat but also specifically desires shoes.
- Significance: This requirement creates significant transaction costs and inefficiencies, as finding such a specific match is difficult. The difficulty of achieving a double coincidence of wants led to the evolution of money, which acts as a common medium of exchange and separates the act of purchase from the act of sale.
Key Takeaway:
The 'double coincidence of wants' is the primary limitation of the barter system, requiring that what a person desires to sell is exactly what the other wishes to buy.