Currently there is a discussion about possible price-ceilings for prescription drugs in the U.S. That’s what Canada does and it is the major reason why their prices are lower. What would be the predictable effect in the U.S. prescription drug market if the government imposed a price ceiling of $100 for a bottle of “XYZ” medicine and if the current “market price” for “XYZ” was $200? (Assume there is no generic equivalent or less expensive substitute).

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The government imposes a price ceiling to control a maximum acceptable price charged by su... View the full answer