Question

If the government implements a binding price ceiling on insulin, this will

A
have to be set above the market equilibrium price to be effective.
B
increase the price consumers will pay for insulin.
C
encourage manufacturers to produce and sell more insulin to increase their profits.
D
decrease the quantity of insulin the manufacturers will be willing to supply.

Answer 1

c. encourage manufacturers to produce and sell more insulin to increase their profits.

Step-by-step explanation:

In a binding price ceiling, the government will force companies to set a certain price below the market equilibrium.

When this happen, the amount of profit margin that the company get from sales is also decreased. To handle this, one of the things that company can do to maintain their total profit is to increase the total sales, This will be beneficial for the customers since the product have higher availability with typically lower price.