Answer :
The right response is option B, or 80 bottles of wine. A commodity's supply and demand, as expressed by its price, are perfectly balanced in a market equilibrium.
The market is stable at this point, therefore nobody wants to modify their stance. When prices fluctuate, consumers and producers respond in different ways. Lower prices promote demand while decreasing supply, while higher prices tend to decrease demand while promoting supply. According to economic theory, a free market will have a single price, known as the market equilibrium price, that balances supply and demand. There is a significant incentive to exchange goods and services since both parties need the limited resource that the other party possesses.
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Final answer:
The actual quantity demanded in the wine market given a price ceiling of $12 cannot be defined without additional information. A price ceiling can result in a shortage if set below the equilibrium price. To assess the impact of a price ceiling on bread in a low-income country, you need to know the equilibrium conditions and calculate the excess demand by subtracting the quantity supplied from the quantity demanded at the set price ceiling.
Explanation:
If the government legally imposed a price ceiling of $12, the actual quantity demanded in the wine market cannot be determined solely based on the price ceiling without additional information such as the demand curve, supply curve, or market equilibrium conditions. In economic terms, a price ceiling is a government-imposed limit on the price charged for a product, with the intention of keeping prices below the market equilibrium price to make goods affordable for consumers. However, price ceilings can lead to shortages if the ceiling is set below the market equilibrium, as the quantity demanded will increase while the quantity supplied decreases, creating excess demand.
Regarding question 57, identifying the equilibrium price and equilibrium quantity before the imposition of a price ceiling on bread in a low-income country also requires specific data on market conditions. Once the demand and supply are established, the shortage or excess demand can be calculated by subtracting the quantity supplied from the quantity demanded at the given price ceiling levels, which might be $2.40, $2.00, or $3.60 depending on the case provided.
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