Refer to the Accompanying Figure, Which Shows Both Short-Run and Long-Run

question 21

Multiple Choice

Refer to the accompanying figure, which shows both short-run and long-run demand and supply curves. If there is a $4 binding price ceiling imposed on a pharmaceutical drug, what will be the amount of the disequilibrium in the short run?

• A) There will be a shortage of 1,500,000 units.
• B) There will be a shortage of 800,000 units.
• C) There will not be a shortage; there will be a surplus.
• D) There will be a shortage of 2,000,000 units.
• E) There will be a shortage of 500,000 units.

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Definitions:

Private Health Insurance

Health insurance coverage provided by non-governmental organizations, offering a range of benefits and coverage options beyond what is typically available through public health services.

Health Care Costs

The expenses associated with medical care, including the costs of treatments, medications, hospital stays, and administrative fees.

Health Care Spending

The total amount of money spent on medical services, treatments, drugs, and other related healthcare services by individuals, insurers, and government agencies.

Health Care Industry

The sector comprising medical services, manufacturing of medical equipment or drugs, insurance, and other goods and services designed to maintain or improve health.