The cost of prescription drugs in the United States is high. Many Seniorsacross the U.S. struggle to afford their medication. If prescription pricescontinue to rise, many seniors will be priced out of the market. Which of thefollowing policies would lower prices for prescription drugs? (check all thatapply)O Excise TaxO SubsidyPrice CeilingPrice FloorOQuantity Control

Answered: The cost of prescription drugs in the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The cost of prescription drugs in the United States is high. Many Seniors
across the U.S. struggle to afford their medication. If prescription prices
continue to rise, many seniors will be priced out of the market. Which of the
following policies would lower prices for prescription drugs? (check all that
apply)
O Excise Tax
O Subsidy
Price Ceiling
Price Floor
OQuantity Control

Expert Solution

Step 1

Tax: The term tax refers to the compulsory payment imposed by the government. Often it occurs that after the tax imposed, the price of the commodity rises.

Step 2

Excise Tax and the price ceiling will help to reduce the price because the reduction in excise tax will reduce the price because the excise tax paid when the purchase is made. Similarly, the price ceiling is the process to control the price. it is the maximum price that a seller can charge. While in the case of subsidy, the government pays the subsidized amount so it has nothing to do with the price.

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