Suppose that the government sets a maximum price for insulin below the equilibrium price.In this situation,

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Setting a maximum price for insulin below the equilibrium price creates a price ceiling. This leads to a shortage (excess demand) rather than excess supply, as the quantity demanded exceeds the quantity supplied at this artificially low price. This situation is inefficient because it prevents the market from reaching equilibrium, where supply equals demand. As a result, total surplus (the sum of consumer and producer surplus) is lower than it would be at the market equilibrium price, where the allocation of resources is most efficient.

Suppose That the Government Sets a Maximum Price for Insulin