Policy make difference in the market

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Reference no: EM131097316

Assume the government now imposes a (binding) maximum legal price for physician office visits (i.e. a price ceiling on the physician office visits).

a) Under what condition would such a policy make a difference in the market (i.e. cause a market distortion)?

b) If the policy does cause a market distortion, how would it affect the quantity of physician office visits that occur in the market?

Reference no: EM131097316

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