Critically analyze the pros and cons of putting a price ceiling on prescription medicine. Make sure to use concepts from the chapter in this unit such as government intervention, inefficiencies, price elasticity, etc. in your answer.
In the first case, assume the medication is for a life threatening illness for which your child has been diagnosed.
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Write My Essay For MeIn a second case, assume the medication is for an improved quality of life issue, such as achieving a healthy weight.
What are the impacts that the pharmaceutical company that makes the medications in question will experience? How will that affect the pharmaceutical company’s production decisions? What about its decisions to conduct further research into new drugs?
SAMPLE SOLUTION
PRESCRIPTION MEDICATIONS
a. In the first case, assume the medication is for a life-threatening illness for which your child has been diagnosed.
The primary objective of the price ceiling is to set the maximum price at which any good can be sold. If the maximum amount for the commodity is placed above the equilibrium price, it has no kind of effect on the supply and demand of the product, but if the same amount is set below the equilibrium price, then there is a drop in the amount…
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