Multiple Choice
Since the Red Cross supplies 95 percent of the blood in the United States, it can be considered a monopolist.Assume that it, in fact, operates like a monopolist.The Red Cross currently charges hospitals and other users $21 for a pint of blood.In order to increase the supply of blood, the government offers the Red Cross a $10 million, lump-sum subsidy.How much more blood supply will the subsidy generate?
A) about 500,000 pints
B) somewhere between 100,000 and 500,000, depending on demand elasticity
C) somewhere between 100,000 and 500,000, depending on the elasticity of supply
D) zero
Correct Answer:
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