Week 9 / March 13, 2017
Policy Application: The Market for Human Kidneys
Policy Question: Should people be allowed to sell their own Kidneys?
If kidneys could be sold
CS = 1+3
PS = 2+4
Net Beneﬁts = 1+2+3+4
If Kidneys can only be donated
CS = 1+2
PS = 0____ DWL 3+4
N.B = 1+2
How does a monopoly maximize proﬁts?
As long as MR > MC, then producing
another unit will ↑ proﬁts.
(Proﬁt maximizing quantity)
When MR = MC, the monopolist looks to
the demand curve to see what price that
corresponds to. At that point, proﬁt is
A pure monopoly exists when: (Sources of monopoly power)
1) There is one seller in the mkt for some commodity/service and there are no close substitutes for this go