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Ans. In terms of compute options and configurations, Reserved Instances and On Demand instances are the same. The only difference between the two is that a Reserved Instance is one you rent (reserved) for a fixed duration, and in return you receive a discount on the base price of an On Demand instance.
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Ans. On demand instance is normal instance means if you create first time so you can use on demand instance, in this instance you can create simple server like 2 gb RAM, 1 core CPU, GP2 30 GB SSD....etc.
and Reserved instance is you can create server and its reserved for 2-3 years and when you give back to this server on AWS they give you discount but on demand and reserved instance price are same.
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Ans. Amazon Elastic Compute Cloud or EC2 provides scalable computing capacity in the AWS cloud. It can be used to create Virtual Environments , storage and configure. EC2 enables to upgrade or downgrade infrastructure according to the rules defined ( with fluctuation in latency, traffic etc )
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