APFIVE Long-Run Effects of a Price Ceiling
Which of the following is a potential long-run consequence of the government imposing a binding price ceiling on life-saving drugs?
A
Increased investment in pharmaceutical research due to guaranteed affordability leading to more advanced drugs.
B
Drug shortages as suppliers may produce less due to lower profitability, harming consumer welfare in the future.
C
Perfect competition arises as firms strive to reduce costs and maintain profitability within imposed limits.
D
Long-term equilibrium is achieved with no deadweight loss as demand increases sufficiently over time matching supply at set prices.
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