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 mean that pharmaceutical companies face an incentive to develop new prescription medicines.
E) The legal maximum price would mean that not all consumers will have access to prescription medicines.

Question

Quizplus · Accepted Answer

With a binding price ceiling on prescription medicines, pharmaceutical companies may not be able to make a profit if they sell the medicines at the maximum legal price. This can lead to shortages in supply, as companies may not be motivated to produce or import the medicines into the country. As a result, not all consumers may have access to the prescription medicines they need. Additionally, pharmaceutical companies may face less incentive to develop new prescription medicines if they cannot make a profit from them.

In Some Countries,a Binding Price Ceiling Is Placed on Prescription