Q1) You are a manager of the organization in America which distributes blood to hospitals in all 50 states and District of Columbia. A recent report signifies that nearly 50 Americans contract HIV each year through blood transfusions. Though every pint of blood donated in United States under goes battery of nine different tests, existing screening methods can detect only antibodies produced by body's immune system-not foreign agents in the blood. As it takes weeks or even months for these antibodies to build up in blood, newly infected HIV donors can pass along virus through blood which has passed existing screening tests. Happily, researchers have developed series of new tests aimed at detecting and removing infections from donated blood before it is used in transfusions. Obvious benefit of these tests is reduced incidence of infection through blood transfusions. The report indicates that current price of decontaminated blood is $80 per pint. Though, if new screening methods are adopted, demand and supply for decontaminated blood will change to
Qd = 175 - P and Qs = 2P -200. What price do you expect to prevail if new screening methods are adopted? How many units of blood will be used in United States? Find out the level of consumer and producer surplus? Show your findings in a graph.
Qd (Quantity Demanded)
Qs (Quantity Supplied)