Question

Shen wants to purchase a new computer and go to the Caribbean for spring break. The computer is priced at $1,299, and the vacation is priced at $750. He has only $1,537 in his checking account, so he cannot afford to purchase both. After much thought, Shen buys the computer and writes a check for $1,299. Identify what role money plays in each of the following parts of the story.

Answer 1

Answer:

Money plays the role as a store of value, a medium of exchange, as well as the unit cost of both the computer and vacation.

Explanation:

Money is a generally accepted medium of exchange or as a means of payment for goods ad services. The value of a product or a service is determined by how much money people are willing to pay for it. Hence money is also a determinant of value.

From the question,

Shen has $1537 in his account, this is the store of value he is willing to exchange for either a computer or vacation.

As he cannot afford both, he measures the opportunity cost and chooses the computer over the vacation. his check of $1.299 with which he buys the computer is his medium of exchange with which he purchased the computer.

The costs of both of the vacation and computer is the unit cost of value p;aced on both of them