If Prices Are Not Allowed to Rise Because of a Price

question 255

Multiple Choice

If prices are not allowed to rise because of a price ceiling, then:

• A) suppliers have an incentive to provide a high level of customer service.
• B) suppliers will compensate for the lower price by increasing the quality of their goods.
• C) prices do not provide the correct information about consumers' valuation of the good.
• D) a shortage will develop, but only temporarily until markets adjust to the lower prices.

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Definitions:

F. Hoffman-LaRoche Ltd.

A global pharmaceutical and diagnostics company that focuses on advancing science to improve people's lives.

BASF AG

A leading global chemical company headquartered in Ludwigshafen, Germany, known for its vast range of products across multiple industries.

Price Fixing

An illegal agreement among competitors to maintain the price of a product or service at a fixed or coordinated level, restricting competition.

International Pharmaceutical Companies

Corporations that operate across borders to research, develop, manufacture, and market medications and healthcare products globally.