--%>
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 : New firms entry in industry What

    What persuades new firms to enter in an industry? Answer: Abnormal profit encourages new firms to enter an industry. 

    		•
  • Q : Raising consumer surplus problem For

    For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gi

    		•
  • Q : Perfectly competitive market and its

    Which of the given is not a characteristic of a perfectly competitive market structure: w) there are a very huge number of firms which are small compared to the market. x) All firms sell the same products. y) There are no restrictions to entry through

    		•
  • Q : Elucidate how Personal income tax is a

    Elucidate how Personal income tax is a major source?

    		•
  • Q : What are the major provisions of GATT

    What are the major provisions of GATT

    		•
  • Q : Describe World Trade Organization

    Describe World Trade Organization (WTO)?

    		•
  • Q : Type of expenditure at the local level

    What is the most important source of revenue and the major type of expenditure at the local level?

    		•
  • Q : Opportunity Cost Opportunity Cost :

    Opportunity Cost:Whenever you select a particular alternative, the next best alternative should be given up. For illustration, when you desire to watch cricket highlights in T.V., you should

    		•
  • Q : Speculators activities over the long-run

    Over the long-run the speculators activities are tend to: (1) decrease the volatility of prices. (2) attract legal attention and result in imprisonment. (3) increase the level and volatility of prices both. (4) yield tremendous profits and raise costs

    		•
  • Q : Activities of speculators in long turn

    The activities of speculators tend to, in the long run: (w) decrease the volatility of prices. (x) attract legal attention resulting in imprisonment. (y) increase the level and volatility of prices. (z) yield tremendous profits and raise costs to cons

    		•