Development of the Barter System

Question 1

What is Production?

Answer 1

The creation of goods and services capable of satisfying wants and
needs.

Question 2

What is a Service?

Answer 2

The act of being of assistance to some. Services are intangible.

Question 2

What is a Good?

Answer 2

Tangible commodities.

Question 3

What is Direct Production?

Answer 3

A system of providing all the goods and services needed to
satisfy oneself and one’s family without the help of others.

Question 4

What is Indirect Production?

Answer 4

The creation of goods and services in large amounts so that
there is a surplus (excess or extra) for trading with other persons.

Question 5

What is Barter?

Answer 5

The exchange of goods and services for other goods and services.

Question 6

What is Division Of Labour?

Answer 6

A system whereby one job is divided into different parts or
tasks and each task is done by a different person.

Question 7

What is Specialization?

Answer 7

A system whereby each person does a specific job, especially the
one for which he/she has the necessary skills.

Question 8

What are the advantages of Specialization and Division of Labour?

Answer 8

1. Workers become more skilled in their job.
2. Jobs become easier to learn.
3. Workers are able to produce more work per day.
4. It saves time to train a person if he/she is performing only one task.

Question 9

What are the disadvantages of Specialization and Division of Labour?

Answer 9

1. Repeating the same job can become boring.
2. Production may stop if one person is sick or absent.
3. Slow workers may be unable to keep up with other workers.
4. If one becomes unemployed, it would be difficult to find a job other than the
   one in which he is specialized.

Question 10

What are the advantages of Barter?

Answer 10

1. Barter made it possible for persons to dispose of their surplus goods.
2. It helped persons obtain a wider variety of things they needed.
3. It helped people to improve their way of life.
4. It encouraged persons to specialize in producing what they do best.

Question 11

What are the disadvantages of Barter?

Answer 11

1. Barter can only take place if there is a double coincidence of wants, that is,
   both persons must want what each other has to offer.
2. It is difficult to fix a rate of exchange that is acceptable to each person.
3. Some goods are too bulky, therefore too difficult to carry around in search
   of someone to barter.
4. Some goods are not easily divided; therefore, they were difficult to barter.
5. Some goods are perishable so they could not be stored for long periods of
   time.