Question

Is there currently a surplus or shortage of human organs available for transplant? Using the demand/supply framework, explain how legalizing the trade for human organs will help move the market towards an equilibrium.

Answer 1

Answer 1:

Yes. There is currently a shortage of human organs available for transplant

Explanation:

This is because in the U.S. the current legislation bans the sale of human organs. Hence the official or legal price of a human organ is $0.

Going by the principles of supply and demand, supply (all other factors held constant) follows in the direction price.

Answer 2:

Legalizing the trade for human organs will have the following impact:

• it would reduce the shortage of human organs. Higher prices usually create increased levels of supply. On the other hand, it may also reduce quantity demanded.

• As soon as the sale of human organs become legal, those waiting to receive organs will have to pay or offer a higher price for an organ. The point of equilibrium is where the demand and supply curves intersect. Changes in the demand curve is highly unlikely however, the supply curve might move to the left because presently the bulk of kidney donors are those who do it from good conscience expecting nothing in return. Those category of people may become de-incentivised more and more from making their donations.

Cheers