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Using information from the text/data and your knowledge of economics,…
Using information from the text/data and your knowledge of economics, discuss price controls as methods to bring in greater equity in a country
Producers
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An increase in the price ceiling for such drugs is essential to maintain the cycle of production, considering that the materials used to make these drugs are scarce
National Pharmaceutical Pricing Authority (NPPA) said that due to the scarcity of inputs required to produce the medicines, “Scarcity implies higher costs of manufacturing, which, in turn, necessitates higher prices.”
Capping prices means that producers may switch to cheaper factors of production in order to cut costs and “use inferior quality inputs and make money that way.” In such a case, there could be negative implications for society in the long run
Consumers
Since production has increased, Heparin would be available to a greater number of people.
those who can afford Heparin at its new higher price would be at an advantage, while for those who cannot afford it, it would be a disadvantage
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Workers
Some workers may lose jobs because of high cost of factors of production and not enough revenue to offset that cost.
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Others pay see pay-cuts, in which case government may impose minimum wage
will benefit some “who already hold jobs but will destroy the chances of many more who would not be employed in the future” as the cost of paying minimum wages is too much for firms to bear.
An alternative may be a wage subsidy, which is more effective and ensures no loss of employment.
Government
disadvantage in both the short and long run as it loses out on indirect taxes from revenue that a firm receives
the government is responsible for providing the goods to those who have not been able to receive them due to the shortage in supply.
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