Exercise 1
I need a discussion minimum of 100
words
Critically analyze the pros and cons of putting a price
ceiling on prescription medicine. Make sure to use concepts such as government
intervention, inefficiencies, price elasticity, etc., in your answer. Think
about the benefits and drawbacks from having a price ceiling on prescription
drugs.
I need a
response for Jodi agreeing with what she posted.
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Establishing a government
imposed price ceiling on medications would have more pros and cons than I'm
sure that can be weighed in on here. When a price ceiling is imposed not
only is the government directly intervening with our natural supply and
demand economy but it is imposing prices that "it" thinks are
appropriate for the medications and for the public. It may be naive to
think that they don't already have a huge hand in this but them having the
direct control over this seems to be counterproductive in my eyes.
Continuing with the cons, this would create a ridiculous emergence of a
black market for prescription medication. One already exists in our country
for narcotics/pain pills etc but the black market there arose due to addiction.
The new black market would be people who severely need the medication but
cannot find it due to the lower availability. Companies will have zero
incentive to manufacture more medication as it's needed because the supply
and demand doesn't affect the pricing. You would have the elite class still
being able to obtain the medication through the means of the black market
and the lower class citizens not having the drug available at all instead
of not being able to afford it. I'm not sure which is worse.
The pros of placing a price ceiling on medication would be that it's
affordable for everybody, if you can find the product.
Reference
Krugman, P., & Wells,
R. Microeconomics. (3rd ed.). Bookshelf: Worth Publishers.
http://online.vitalsource.com/books/146416651X/
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I need a
response for Matthew agreeing with what he posted.
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Hello all, According to our book
a price ceiling is very much like rent control for housing. This is, in a
nutshell, government intervention. The prices are controlled to make sure
that the prices could still be affordable. An advantage of a price ceiling
is that it guarantees affordability. Another advantage is if the market is
already inefficient when the ceilings are imposed, it could give the market
a push in the right direction towards efficiency. Disadvantages of price
ceilings are that normally when they are implemented our country is at war
and in dire straits. Another disadvantage is that availability is
dramatically shortened of whatever there is a price ceiling on. When you're
dealing with price ceilings there is the constant presence of inefficient
allocation to consumers as well.
Matt
I
need a response for Travis agreeing with what he posted.
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Travis
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4/17/2014 6:07:55 PM
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Hello class and prof.,
Price ceilings does has its pros
and cons. When a price ceiling is set, it keep the price from going any
higher. This is beneficial to the consumers during times of inflation, as
well charging high prices for limited goods or services because they can.
When the price is set below the equilibrium everybody can afford it. The
bad part is that if the price is set below the equilibrium price, it can
cause a shortage of goods, and the emergence of black markets.
T Simmons
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