Many people argue that the U.S. government should control pharmaceutical prices. What would most likely happen as a result of this policy?
A) Lower prices would mean lower profits and hence less incentive for firms to engage in research and development of new drugs.
B) Government price controls on pharmaceuticals would lead to an increased standard of living.
C) The number of new drugs would increase as firms would compete for new markets.
D) Demand for pharmaceuticals would decrease as a result of the lower prices.

Question

Quizplus · Accepted Answer

If the government controls pharmaceutical prices, firms would have less profit and incentives to invest in research and development of new drugs. This would lead to a decrease in the number of new drugs coming to the market, ultimately hurting the public in the long run. Lower prices may seem attractive, but they can have unintended consequences on the pharmaceutical industry.

Many People Argue That the U