Question

ou 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 infected 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 price 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.

Instruction: Enter your response rounded to the nearest whole number.

Price: $

Units of blood:

Consumer surplus: $

Producer surplus: $

Answer 1

enswer The current prce of decontaminated blood is so papante Qd = 210-isp Qs = 2sp-150 QUE QUE 1210- 115p = 2.5p - 150- 2104 150 - 2.5p+1.5p. 360 zup. p=90 Equilbrom price will be go. QS = 2.5p-1so. = 215 (90) - 150 = 225-150 = 75 UDIJI, Consumer Surplus is amount of profit which is {cured by consumes by paying low pace to commodity al. Compare to willingnen, while producer surplus as surplus of producer which is Sained with producees get higher price tn. common dity as producen can sell the commodity to Lower price

below Equilibrum price and above The area Supply price ya come 140 - consomer surplus 904 6oo 60 Producer Surplus. surplus x 75 quantity Mhrimm Maximum sice price that that consumes ac willing to pay for commodity. Que n = 210-),5P. 0=210-lisp. lisp=210 p= 210 - 2100 T Tis. 15 . = 140 Minimum price on which produces are willing to sell then good Ex = 2.5p-150 0 = 2.5p-150 150 - 2.5 p.

p=150 pe zis - 1300 = 60, 2 .5 = = 60. Amant of consumer supplies - Erboxy =\x75(140-90) - 4(75)(0) a 1875 producer Surplus = '/+bob - %(75) (90-60) = 1/2 (75) (30) =1125