If governments put a price ceiling on patented drugs, what will happen to the production of the drugs?

Production of the drug increases

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Production of the drug decreases

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Production of the drug may increase or decrease depending on demand

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The firm will shut down and stop production.

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Solution

The correct option is A
Production of the drug increases

If the governments put a price ceiling on patented drugs, the lower price will become the new MR and the profit-maximizing quantity will increase correspondingly. Hence, the firm would produce more drugs.

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If governments put a price ceiling on patented drugs, what will happen to the production of the drugs?

The correct option is A Production of the drug increases If the governments put a price ceiling on patented drugs, the lower price will become the new MR and the profit-maximizing quantity will increase correspondingly. Hence, the firm would produce more drugs.

The correct option is A
Production of the drug increases

If the governments put a price ceiling on patented drugs, the lower price will become the new MR and the profit-maximizing quantity will increase correspondingly. Hence, the firm would produce more drugs.