A person trades in a car when buying another. A)Is the used car a medium of exchange? Is this a barter transaction?
B) could you tell by watching someone buying mints (white discs) with coins (bronze discs) which one is money?
Here are my answers but I'm not really sure so if someone could please explain it to me :
A) yes, the used car is a medium of exchange because it is accepted as a (part) payment for the new car. However my confusion here is that the old car cannot be used to buy something else , which is part of the definition of a medium of exchange right ? Then I said that it is not a barter transaction because it involves a medium of exchange ( the car and money ) , it's not simply the fact that one good is being exchanged for another .
B. No you couldn't tell, but I wasn't sure how to explain it
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Medium of exchange and barter question watch
- Thread Starter
- 09-11-2015 21:36