Economics for your Classroom from Ed Dolan’s Econ Blog The Looming Blood Surplus: A Case Study in Supply and Demand September 15, 2014 Terms of Use: These slides are provided under Creative Commons License Attribution—Share Alike 3.0 . You are free to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like the slides, you may also want to take a look at my textbook, Introduction to Economics , from BVT Publishing.
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The Looming Blood Surplus: A Case Study in Supply and Demand
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Economics for your Classroom fromEd Dolan’s Econ Blog
The Looming Blood Surplus: A Case Study in
Supply and DemandSeptember 15, 2014
Terms of Use: These slides are provided under Creative Commons License Attribution—Share Alike 3.0 . You are free to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like the slides, you may also want to take a look at my textbook, Introduction to Economics, from BVT Publishing.
Many Americans, used to donating blood in exchange for a warm glow of public service rather than cold cash, would be surprised to learn that the blood they donate flows straight into the market economy
In fact, blood is a $3 billion business. Donated blood is processed, stored, and sold to hospitals by commercial brokers and by not-for-profit organizations like the Red Cross.
The market for blood is entering a period of turmoil
New medical techniques mean that the amount of blood purchased at any given price will decrease
That change is shown by a shift of the demand curve to the left, from D0 to D1
The technologies do not directly affect the costs of supplying blood, so the supply curve does not shift
In response to the decrease in demand, producers move down and to the left along the supply curve
The market reaches a new equilibrium at the price P1
Sept. 15, 2014 Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Restrictions on donations
FDA regulations place certain restrictions on blood donations
For example, since the 1980s, donations from gay men have been completely banned
In view of new testing and screening techniques, the American Red Cross and the American Association of Blood Banks consider the current FDA ban to be “medically and scientifically unwarranted.”
It is estimated that lifting the ban would increase total donations by about 1.4 percent
Bloodmobile collecting donations for Children’s Hospital Boston
There is no single, transparent, market for blood as there is for wheat or crude oil. However, reports from individual market segments show widespread downward pressure on prices
Example: Competition between suppliers in Indianapolis has pushed the price down from $220 per unit to $180 or below
Example: Downward pressure on blood prices is reflected in falling prices for the stock of companies like Haemonetics Corp., a supplier of software and materials to blood centers One unit of frozen blood plasma