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
d
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