Multiple Choice
Which type of pricing is used when a firm's objective is to gain as much market share as possible?
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0. Basic Principles of Economics
Introduction to Economics
Struggling with Microeconomics?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
With _____, the value of money is allowed to fluctuate with supply and demand.
A
commodity money
B
a fixed exchange rate system
C
barter
D
a floating exchange rate system
Verified step by step guidance1
Understand the concept of money value fluctuation: The value of money can either be fixed or allowed to change based on market forces such as supply and demand.
Identify the types of monetary systems: Commodity money is backed by a physical good, a fixed exchange rate system pegs the currency to another currency or commodity, and barter involves direct exchange of goods without money.
Recognize that in a floating exchange rate system, the currency's value is determined by the foreign exchange market where supply and demand interact freely.
Compare the options given: Since commodity money and fixed exchange rate systems do not allow free fluctuation, and barter does not involve money, the floating exchange rate system is the one where money's value fluctuates.
Conclude that the correct answer is a floating exchange rate system because it allows the value of money to change according to supply and demand.
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