Critically analyze the pros and cons of putting a price ceiling on prescription medicine. Make sure...

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Economics

Critically analyze the pros and cons of putting a price ceilingon prescription medicine. Make sure to use concepts from thechapter in this unit such as government intervention,inefficiencies, price elasticity, etc. in your answer.
In the first case, assume the medication is for a lifethreatening illness for which your child has been diagnosed.
In a second case, assume the medication is for an improvedquality of life issue, such as achieving a healthy weight.
What are the impacts that the pharmaceutical company that makesthe medications in question will experience? How will that affectthe pharmaceutical companyâ€™s production decisions? What about itsdecisions to conduct further research into new drugs?

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3.8 Ratings (547 Votes)

At times government interferes in the market and sets the maximum price at which goods can be sold This is price ceilingIf the price ceiling is above equilibrium price there is no effect on demand and supply But if the price ceiling is below equilibrium price there will be shortage in the marketIn See Answer

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