Suppose the Market for Kidneys Is Depicted in the Graph

question 33

Multiple Choice

Suppose the market for kidneys is depicted in the graph shown. Initially, kidneys are exchanged by donations only (price = $0) . If the government decides to legalize kidneys sales and the market reaches equilibrium, then:

• A) total surplus will increase.
• B) consumer surplus will remain the same.
• C) producer surplus will remain the same.
• D) a shortage of kidneys will arise.

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Definitions:

Arbitrage Profit

Earnings generated by exploiting the price differences of identical or similar financial instruments on different markets or in different forms.

Oil Futures

Oil futures are contracts to buy or sell oil at a predetermined price on a specified future date, used for hedging or speculation on oil price movements.

Risk-Free Rate

The rate of return on an investment with no risk of financial loss, typically associated with government bonds.

Oil Futures

Contracts to buy or sell oil at a predetermined price on a specified future date, used as a financial instrument for hedging or speculative purposes.