Question

Assume the sale of human organs is legalized and a free market develops. Explain the impact each of the following would have on the equilibrium price and output in the market for kidneys. （please type the answer, no photo)

A. Incomes decreases for potential buyers of kidneys.

B. A new form of kidney dialysis is developed that can be taken as a pill at home once a month.

C. The government taxes anyone that sells a kidney. The person that sells the kidney must pay the government half of what he or she earns by the sale of his or her kidney.

Answer 1

Solution A

Any income decrease would cause aggregate demand to decrease and hence prices and quantities will come down.

Solution B

New innovation will cause better easiness and uptick in demand and hence prices and quantity both will increase.

Solution C

Sales tax will decrease willingness to sell and hence supply curve shifts left causing prices to increase while quantity to decrease.