Suppose a Vaccine for the Common Cold Is Discovered

question 21

Multiple Choice

Suppose a vaccine for the common cold is discovered.The government begins to produce the vaccine in as large a volume as possible.However,the market clearing price is very high due to high demand for it.Following this,the government introduces a price control and sets up an allocation scheme to control the vaccine's distribution.Which of the following is likely to be true about the price control introduced by the government?

• A)The price set by the government is above the market equilibrium.
• B)The price set by the government is below the market equilibrium.
• C)The price set by the government is same as the market equilibrium.
• D)Nothing can be determined about the price control from the information given here.

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Definitions:

Canadian Dollars

The Canadian dollar is the currency of Canada, often represented by the symbol CAD or simply $.

Lower Terms

Expressing a fraction in its simplest form so that the numerator and denominator are as small as possible.

Ratio

A comparison, by division, of the relative size of two or more quantities.

Proportion

A statement of the equality of two ratios.