Define 'market' in economics. (b) If the government sets a guarantee price of 150 FCFA per packet of bread, what is this known as? Calculate the costs to the government if she imposes a price of 200 F

Question 5

a) A market in Economics refers to any place or system where buyers and sellers interact to exchange goods, services, or resources. This interaction facilitates the determination of prices and quantities traded.

b) From Table 2:

• i) If the government sets a guarantee price of 150 FCFA per packet of bread, this is known as a price floor or minimum price.

• ii) Calculate the costs to the government, if she imposes a price of 200 FCFA per packet of bread and decides to buy the excess in the market. At a price of 200 FCFA: Quantity supplied = 200 packets Quantity demanded = 4