Suppose That the Government Sets a Maximum Price for Insulin

question 119

Multiple Choice

Suppose that the government sets a maximum price for insulin below the equilibrium price:

• A)there will be an efficient level of insulin produced.
• B)there will be excess supply of insulin.
• C)total surplus will be lower than it would be at the market equilibrium price.
• D)total surplus will be greater than it would be at the market equilibrium price.

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Definitions:

Convertible Bonds

Debt securities that can be converted into a predetermined number of the issuing company's shares, usually at the bondholder's option.

Bullwhip Effect

A phenomenon where small fluctuations in demand at the retail level cause progressively larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.

Retailers

Businesses that sell goods or commodities directly to consumers.

Wholesalers

Businesses that buy goods in large quantities from manufacturers and sell them in smaller quantities to retailers or other businesses.