Question

Demand for healthy kidneys is high in both India and in Nepal. But it is also illegal to buy or sell organs. Despite the legal and social disapproval, there is an illegal market for organs. Assuming the legal and social disapproval does not influence buyers but discourages sellers from offering organs, the disapproval will: Choose one answer.

a. raise price and raise quantity.
b. raise price but lower quantity.
c. lower price but raise quantity.
d. lower price and lower quantity.

Answer 1

Answer: the correct answer is b. raise price but lower quantity.

Explanation: If price goes up, fewer people want to buy so the equilibrium quantity lowers.