Assume that you were ready to buy a custom tailored
Dress (or men’s suit) and you are prepared to pay up to $200 for it. Also
assume that the tailor is prepared to sell that item of clothing for as little
arrive at the tailor shop, the posted price for the item is $150. Discuss how
this scenario relates to producer and consumer surplus and how such surpluses,
if any, affect buying and manufacturing decisions
recent purchases you have made and for which you feel that a similar rational
seemed to be at work.
Critically analyze the pros and cons of putting a
price ceiling on prescription medicine. Make sure to use concepts from both
chapters seen this unit such as government intervention, inefficiencies, price
elasticity, etc. in your answer.
In the first
case, assume the medication is for a life threatening illness for which your
child has been diagnosed.
In a second
case, assume the medication is for an improved quality of life issue, such as
achieving a healthy weight.
What are the impacts that the pharmaceutical company
that makes the medications in question will experience? How will that affect
the pharmaceutical company’s production decisions? What about its decisions to
conduct further research into new drugs?