In the market for organs for transplant, such as kidneys and hearts, the price is constrained to equal zero. Opposition to any type of remuneration for donating organs has been all but absolute from physicians and legislators. Reliance on altruism, however, does not appear to be working. The number of people waiting for organ transplants (and dying if they do not receive them) is double the number of willing donors. Relying on graphs, explain the effect of the proscription of financial incentives for organ donations on the producer surplus and consumer surplus in this market.
Answer to relevant QuestionsUsing a pair of graphs like those in Figure 10.10, illustrate a situation in which the United States would be an exporter of the good in question, and identify the equilibrium.Draw a diagram to show the deadweight loss of a monopoly with a marginal cost curve that is vertical at the profit-maximizing output level.“A competitive firm will never operate where marginal cost is declining, but a monopoly may.” True or false? Explain.Assume that all consumers have identical demand curves for local telephone service, and the producer of such service is a monopoly. Compare price, output, profit, and consumer surplus when (a) the monopoly sets a uniform ...What are the assumptions of the theory of monopolistic competition? In what way do these assumptions differ from those of the perfectly competitive model?
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