Question

In some countries, a binding price ceiling is placed on prescription medicines. What would someone expect the prescription medicine market to be like in these countries? 

a. The legal maximum price would mean that all consumers are able to receive the medicines they need at prices they can afford. 

b. The legal maximum price would mean that pharmaceutical companies face an incentive to sell more prescription medicines in that country. 

c. The legal maximum price would mean that it is unlikely that an illegal and dangerous black market for prescription drugs will form in that country. 

d. The legal maximum price would strengthen the incentive to develop new prescription medicines. 

e. The legal maximum price would mean that not all consumers will have access to prescription medicines.

Answer 1

Ans) the correct option is e) The legal maximum price would mean that not all consumers will have access to prescription medicines.

A binding price ceiling is imposed below the equilibrium price which means there is shortage where quantity demanded exceeds quantity supplied. So not all consumers will have access to prescription medicines at the legal minimum price.