AWS Certification Practice Exam 2025 – The All-in-One Resource to Master Your Certification!

Spot Instance pricing in AWS is determined by the dynamics of supply and demand in the cloud computing marketplace. Spot Instances allow users to bid on unused EC2 capacity at potentially lower prices compared to On-Demand Instances. The prices are set based on the availability of EC2 capacity and the number of users willing to purchase that capacity.

When there is a high demand for EC2 instances and limited availability, the prices for Spot Instances increase. Conversely, when there is a surplus of available capacity and fewer users are bidding for it, the prices tend to decrease. This model creates a fluctuating price mechanism, whereby the cost can change frequently based on market conditions, leading to potential cost savings for users who are flexible with their instance usage.

The other options do not accurately capture the pricing strategy for Spot Instances. A fixed pricing model would imply constant prices, which contradicts the nature of Spot pricing volatility. Underutilization of instances does not inherently affect pricing, and predefined company pricing does not apply to Spot Instances, as they operate under a bidding model driven by market conditions.