Suppose one knows two facts: first, the market for prescription drugs experiences chronic shortages and second, the government sets the price for prescription drugs. One can conclude that the government has:
A)set the price too high.
B)set the price above the equilibrium price.
C)encouraged buyers to hoard prescription drugs.
D)set the price below the equilibrium price.

Question

Quizplus · Accepted Answer

If there is a shortage, then this suggests that the regulated price is lower than the equilibrium price.

Suppose One Knows Two Facts: First, the Market for Prescription