Barter, indirect barter

• Economie
• Middelbare school
• vwo
• Leerjaar 3

Welcome

Homework: exercise 11 on page 17

Barter

Indirect barter

Specialisation

Labour productivity

Exercise 11 A

€ 4.50 per week

€ 4.50 X 52 weeks = € 234 per year

€ 234/ 12 months = € 19.50 per month

Exercise 11 B

€ 120/ 12

€ 240/ 12

€ 240/ 12

€ 10.5 X 52 = € 546

€ 546/ 12 = € 45.50

€ 228/ 12

Total expenses: € 65 + € 46 + € 39 = € 150

Exercise 11 C and D

The monthly income of € 155 is bigger then the total expenses of € 150  

Exercise 11 D

She doesn't have to purchase a bike next year

She saves € 228

Plus she can save € 5 each month (155- 150)

€ 5 X 12 = € 60

She can buy € 60 + € 228 = € 288 worth of non-recurring high charges

Barter

Exchanging goods or services

                                   (without the use of money)                                              

Which means were used as money

Means used as money

Shells

Jewelry

Salt 

Coffee beans

Cocoa beans

Paper currency (notes)

Disadvantages barter

• You need a mutual benefit -->
  
• find someone who has what you want and who wants what you have
  
• Transporting sacks of grain is difficult
• Your merchandise can spoil
  
• Difficult to determine an exchange ratio
  
• (how many sacks of grain for a boat)
  
• Some things are indivisible (a boat)

Advantages money

• Everyone accepts money
• You can specialise in one job and improve your skills
• As you specialise your labour productivity will increase
• labour productivity = the number of items an employee can produce within a specific time period

What would function as money better: coffee beans or fish

1. Coffee beans
2. Fish

What would be a reason for people switching from indirect barter to barter again?

Exercises

Read	Exercises	Check answers
Page 20	2 - 4	Answer sheet
Page 21	5 - 6	Answer sheet
Page 22	7 - 10	Answer sheet

Economy of scale

Producing on a large scale

A boat € 1,000 Bate: € 0.10 a fish

1,000 fishes. 

Costprice: € 1,000/ 1,000 = € 1

+ bate € 0.10 = € 1.10

and now he's going to produce a large scale.........

Economy of scale

Purchase a big boat € 10,000 

He catches 20,000 fishes

Bate: € 0.05 (he gets a discount when buying large quantities)

Costprice:

€ 10,000/ 20,000 = € 0.50

+ € 0.05 = € 0.55

From € 1.10 --> € 0.55 

Economy of scale

• As you produce on a larger scale
• your costprice will decrease
• because your fixed costs are divided by a larger figure
• and you receive a bigger discount on purchases

Homework

Read	Exercises	Check answers
Page 20	2 - 4	Answer sheet
Page 21	5 - 6	Answer sheet
Page 22	7 - 10	Answer sheet