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:

Discount Series

A sequence of discounts applied one after the other, often used to determine the final price after multiple discounts are applied.

Trade Discount

A reduction in the price of goods or services offered by a seller to a buyer in the business-to-business market.

Discount Series

A sequence of discounts applied one after the other to reduce a product's price or to calculate the present value of a stream of future payments.

Invoice Notation

Symbols or codes used on an invoice to provide specific information about the transaction or goods involved.