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

question 6

Multiple Choice

Suppose one knows two facts: first, the market for prescription drugs experiences chronic shortages and second, the government sets the price for prescription drugs. One can conclude that the government has:

• A)set the price too high.
• B)set the price above the equilibrium price.
• C)encouraged buyers to hoard prescription drugs.
• D)set the price below the equilibrium price.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual rate.

Interest Rate

The percentage of principal charged by the lender for the use of its money.

Interest Rate

The fraction of a loan amount charged as interest to the borrower, often shown as an annual percent of the outstanding loan.

New Capital

Additional funds or assets put into a business by the owners or investors intended for the expansion or improvement of the enterprise.