Using the marginal cost and marginal benefit model.

There seems to be a shortage of organs for transplant in the United States. This is not due to a shortage of organs which COULD be transplanted, but from a shortage of organs which are AVAILABLE for transplant. Many perfectly healthy organs are simply never removed following death and offered for transplant.

Exploration: Does marginal cost and benefit affect something as critical as organ transplants?

The window above illustrates the simplest form of marginal revenue – marginal cost structure. In this case the marginal revenue is simply the price received and marginal cost is a linear, increasing function of quantity. This makes sense in the case of organ transplants. For the organ donor there is only one opportunity to donate so there can be no repetition of the donation. Thus the "additional revenue received from an additional donation," or marginal revenue, is zero beyond the first donation. Since this is the case for every person, it is also the case for collection of all persons. In the case of marginal cost, it is certain that the cost of receiving an additional organ to the hospital will rise as the number of organs donated rise. The fixed number of operating theaters, physicians, etc. will result in increasing marginal costs.

As has been the case in other situations, the equating of marginal cost and marginal revenue leads to the most efficient outcome. To use this applet, set the price to an appropriate amount and then drag the quantity to the point where marginal revenue (price) is equal to marginal cost.

1. It is not legal in the United States to sell your organs – you are encouraged to be an organ donor but neither you nor members of your family can sell them. How does this affect the number of organs offered for transplant?
   
   
2. Take the notion presented above and think about what the outcome might be if we allowed people to sell their organs.
   
   

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Exercise picked up from the 2e Microeconomics textbook.