--%>
Assignment Help - homework help

Elucidate the use of money as a medium of exchange

Elucidate the use of money as a medium of exchange in Market System?

E

Expert

Verified

1. Money substitutes for barter, which requires a coincidence of wants.  (I may want what you produce but you may not want to exchange for what I have.)

2. Willingness to accept money in place of goods permits 3-way trades (or multilateral trades).

a. Floridians give money to Nebraskans for wheat who give money to Idahoans for potatoes who give money to Florida for oranges.

b. Foreign exchange markets permit Americans, Japanese, Germans, Britons, and Mexicans to complete international exchanges of goods and services.

c. Detroit autoworker produces crankshafts for Buicks.  If the worker were paid in crankshafts, he would have to find grocers, clothing retailers, etc., who would be willing to exchange their products for a crankshaft.  It is much more efficient to use money wages than to accept one’s wages in crankshafts!

   Related Questions in Business Economics

  • Q : Need of the Economic Efficiency

    Economic efficiency for society needs which the: (i) opportunity costs of all goods be at their lowest possible values. (ii) maximum probable benefits are acquired for given costs. (iii) greatest possible net benefits are squeezed through available re

    		•
  • Q : Define Average cost and Marginal cost

    Briefly explain the term Average cost and Marginal cost?

    		•
  • Q : Costs for a firm Question:  (a)      

    Question:  (a)       Complete the following table of costs for a firm.  (Note: enter the figures in the MC  column between outputs of  0 and 1, 1 and 2, 2 and 3, etc.) 

    		•
  • Q : Effects of that depreciation or

    Would a decline in U.S. consumer income or a weakening of U.S. preferences for foreign products cause the dollar to depreciate or appreciate?  Other things equal, what would be the effects of that depreciation or appreciation on U.S. exports and imports?

    		•
  • Q : How do households dispose of their

    How do households dispose of their income?

    		•
  • Q : Describe the term Cost of debt Briefly

    Briefly describe the term Cost of debt?

    		•
  • Q : Our junior high school serves a

    Comment on the following statement from a newspaper article:  “Our junior high school serves a splendid hot meal for $1 without costing the taxpayers anything, thanks in part to a government subsidy.”

    		•
  • Q : Example of public goods Drinking at a

    Drinking at a public water fountain is: (w) a public good because anyone may drink from it. (x) results in a negative externality because others can’t drink from this at similar time. (y) a positive externality because you are benefiting by other’s provisi

    		•
  • Q : Define the term Weak-form market

    Define the term Weak-form market efficiency. Explain briefly.

    		•
  • Q : Define the Legal forms of businesses

    Define the Legal forms of businesses?

    		•