EC 252 Study Cards

On Valentine's Day the demand for roses and chocolate increases. The price of roses, however, tends to increase by more than the price of chocolate on that day. Why? A) Fewer people want chocolate than roses. B) Roses are perishable and chocolate can be stored. C) Roses are lighter so they are cheaper to ship. D) Chocolate is grown closer to the United States, therefore costs are lower.

B) Roses are perishable and chocolate can be stored.

If the costs of staying at a party a few more minutes are higher than the benefits, you should: A) stay longer B) leave the party C) never have attended the party in the first place. D) have thrown your own party

B) leave the party

Why would a centrally planned global rose market likely fail? A) because agricultural markets are too vulnerable to disturbances such as those caused by weather changes B) because all markets eventually fail C) because central planners would be unlikely to have all the information necessary about all of the individuals, countries, and linked markets involved D) because differing laws among countries make international trade of this sort too complicated

C) because central planners would be unlikely to have all the information necessary about all of the individuals, countries, and linked markets involved

Thanks to the price system, local interests and local knowledge are: A) in direct conflict with all other local interest and local knowledge. B) independent from other local interest and local knowledge in the market. C) coordinated with other local interests and local knowledge across the global market. D) overshadowed by global interest and global knowledge.

C) coordinated with other local interests and local knowledge across the global market.

If the FDA enacts more stringent pharmaceutical drug tests, two costs of this policy would be: A) drug lag and drug lapse. B) drug lapse and drug misallocation. C) drug loss and drug lag. D) drug misallocation and drug loss.

C) drug loss and drug lag.

The "invisible hand" concept is: A) always present as a force in market outcomes. B) never present as a force in market outcomes. C) frequently present as a force in market outcomes. D) not well understood as it relates to market outcomes.

C) frequently present as a force in market outcomes.

To an economist, the price system's ability to coordinate massive amounts of activity all over the world is: A) obvious and uninteresting. B) well-organized and logical. C) mysterious and inspiring. D) manipulative and concerning.

C) mysterious and inspiring

Which part of the market for Valentine's Day roses was NOT mentioned in the video's discussion of the invisible hand? A) auctioneers B) retailers C) regulators D) shippers

C) regulators

Valentine's Day roses provide an illustration of the concept that "Markets Link the World," because: A) every developed country in the world has its own independent market for growing, shipping, and selling roses. B) roses grown in the United States for Valentine's Day are exported all over the world. C) the market for roses on Valentine's Day depends on the cooperation of many individuals in different countries around the world. D) every year more and more countries take part in the Western tradition of giving roses on Valentine's Day.

C) the market for roses on Valentine's Day depends on the cooperation of many individuals in different countries around the world.

How many people know the full story of how a Kenyan rose ends up in a Chicago flower shop on Valentine's Day? A) No one, since all roses sold in the United States are grown domestically. B) Several people who work in the office of the Global Rose Czar. C) Most of the people involved in any part of the global market for roses. D) No one, the story is too complex.

D) No one, the story is too complex.

The price system is able to coordinate activity in many places around the world to deliver goods such as Valentine's Day roses, when each person: A) acts purely in the interest of society. B) is well-informed about the preferences and technologies that exist in every other part of the world. C) follows the directives of the Global Rose Czar. D) acts in his or her own self-interest.

D) acts in his or her own self-interest.

There is a great amount of global cooperation in the market for roses thanks to each of the following, EXCEPT: A) the invisible hand. B) the self-interest of each individual involved. C) the incentives created by prices. D) the Global Rose Czar who coordinates global rose activity.

D) the Global Rose Czar who coordinates global rose activity.

Millions more roses are demanded on Valentine's Day than on any other day. How do rose farmers in Kenya know to produce enough roses? A) by command of the Global Rose Czar B) from requests made by U.S. flower retailers C) from their understanding of Valentine's Day D) through the price system

D) through the price system