Which one of the following functions of money would be most useful to a fishers' cooperative that used to barter its catch for fuel, ice and repair services...

Assessment: Economics 9214 | Paper 1 Mock 01 | Written Paper 1 Subject: Economics - 9214

Question 1 Report

Which one of the following functions of money would be most useful to a fishers' cooperative that used to barter its catch for fuel, ice and repair services? The cooperative now prices all goods in the local currency.


(a) Which function of money is shown when the cooperative uses one currency to compare the price of fuel and ice? [1]
(b) Explain one benefit to the cooperative of using money rather than barter. [1]

Answer Details

(a) Using one currency to compare the prices of fuel and ice shows money acting as a unit of account, or measure of value [1]. It gives goods and services a common unit in which prices can be stated and compared.

(b) Money removes the need for a double coincidence of wants, making exchange quicker and easier [1]. Under barter, the cooperative would need to find someone who both wanted fish and was willing to supply the exact fuel, ice or repair service wanted. Money allows the fish to be sold to one person and the money spent elsewhere.

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