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

Question

Quizplus · Accepted Answer

The chronic shortages in the market for prescription drugs suggest that the quantity demanded exceeds the quantity supplied at the current government set price. Therefore, the government has set the price below the equilibrium price, leading to scarcity and shortages.

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