Question

Van has saved $30 per week to buy a new Blu-Ray player. He compares two different models: a Panaview that is priced at $130 and a Zony model that is priced at $140. Van decides to purchase the Zony Blu-Ray player for $140.
Identify what role money plays in each of the following parts of the story.
1. Van can easily determine that the Panaview model has a lower price than the Zony model.
2. Van saved $30 per week.
3. Van pays $140 for the Blu-Ray player.

Answer 1

Answer:

Money is served three purposes- unit of account, store of value and medium of exchange

Explanation:

In this question, we are to identify the role money plays in each of the following parts of the story.

Money is used to measure the valueof good in money unit, so the values can be compared easily.

In the first case, Van is comparing between value of goods. the money serves as unit of account.

Money is used as medium of echange to avoid the difficulty arising out of goods to goods exchange.

In the second case, Van is exchanging $140 for the DVD, money is serving as medium of exchange.

Money also has store of value, it can be saved and exchanged for goods over time.

In third case, Van is saving money for future exchange, money is serving its store of value function.