Money in an economic system, Microeconomics

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Money facilitates market activities and is essential in complex market systems.  With money people can avoid the problems  associated with coincidence of wants.  Between, these problems is the pricing of commodities.  Prices stated in the terms of all possible trading goods makes it complex to determine what anything costs.  In barter economies hours are spent in negotiating for even easy transactions, these hours are resources that could have been spent on other activities (thus the hours of negotiations are the opportunity cost of a money economy).  

 


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