Question

You are the manager of an organization in America that distributes blood to hospitals in all 50 states and the District of Columbia. A recent report indicates that nearly 50 Americans contract HIV each year through blood transfusions. Although every pint of blood donated in the United States undergoes a battery of nine different tests, existing screening methods can detect only the antibodies produced by the body’s immune system— not foreign agents in the blood. Since it takes weeks or even months for these antibodies to build up in the blood, newly effected HIV donors can pass along the virus through blood that has passed existing screening tests. Happily, researchers have developed a series of new tests aimed at detecting and removing infections from donated blood before it is used in transfusions. The obvious benefit of these tests is the reduced incidence of infection through blood transfusions. The report indicates that the current price of decontaminated blood is $60 per pint. However, if the new screening methods are adopted, the demand and supply for decontaminated blood will change to Q^d= 210 - 1.5P and Q^s = 2.5P - 150. What do you expect to prevail if the new screening methods are adopted? How many units of blood will be used in the United States? What is the level of consumer and producer surplus? Illustrate your findings in a graph.

Answer 1

Answer The distributes to hospitals so stales recent report indicales nearly so Americans contact de contam blood will change a -210-115P and Qs = 2.5P150 Report indicates the corrent decontaminated 80 per cent The decontaminated blood will change and equalib aium price and quantity demand is equal els suppy 210 - 1.5P - 2158-150 210 +150 =2.5'+15p 360 = 4P 360 = qop e n Equilibrium price will =90 Blood that will be country Y Q = 2.5P-150 2.5 (94) – 150

= 225-150 = 75 unil a la The consumer Surplus the amount of proful Consumer paying low price commodity williger while prduced supplus the producer is examed produces higher price the commodity the are below equibrium and supply cure diagran give below shown of both consummer and producers 7401 Consumer Surplus Price Produce Surplus 62 75 Quantity ng ind Equilibrium price 90 quantity supplied a demanded 75 units the Consumer Surplus and producer surples market quanlity 75 ore

Produces are ready sell commodity below to budget ao for Same Commodity surplus of producers Consumers for the commodi The er = 210 - ISP o 210-1.5P p=210 - 140 The producers are willing to sell good Q = 2.52-150 150=2.50 P - 2.5 150 - 150 = $60 2.5 Amount of consumer surplus Consumer af base & heigh - 1 x 75 x (140.90) - 1/2 x 75x50 D83750

Produces surplas Amount = 1 base xheigh = ļ 75 + (90-60) = 4x75 (30) I x 2250 1,125