Shortage Of Kidneys Case Study
A shortage is defined as a situation in which the quantity demanded is greater than the quantity supplied. Following the general rule of market equilibrium, in which the quantity demanded equals the quantity supplied, if the price of a kidney was below equilibrium price, then this could be a possible cause as to the reason of why there is a shortage of kidneys available for transplant. Many people would be unlikely to supply a kidney, unless they are adequately paid for it.
The Law of Supply states that, holding all else constant, increases in the price of a product cause an increase in the quantity supplied, and decreases in the price of a product cause a decrease in the quantity supplied. In terms of kidneys supplied on the market, a lower price would in fact cause a shortage in kidneys, according to the law of supply. This is generally because people are more likely to supply more of a particular good if they are to make a greater profit off of …show more content…
The objective of this regulation is to achieve an increase in the stock of these fish species available for breeding, and hence an increase in future stocks. Suppose there is no change in demand for the endangered fish species over time. How would you expect the government regulation to affect the prices of these fish species?
If the governments regulation of endangered fish stocks does in fact lead to an increase in the future stocks of the breed, then this could quite possibly lead to a surplus. A surplus is defined as a situation in which the quantity supplied is greater than the quantity demanded. As there is no change in the demand for the fish, the increase in stock will almost certainly lead to prices falling significantly.
The substitution effect is defined as the change in the quantity demanded of a good or service that results from a change in price, making the good more or less expensive relative to other goods that are substitutes. In terms of this particular endangered fish, if the price was to fall significantly, then it could be expected that many people will decide to substitute their eating of other fish or even other meats, if they realise that they can acquire this fish at a cheaper and more attractive price than before. In economic terms, a substitute is a good that can be used for the same purpose, and is purchased as an alternative to another good of a similar