After you have studied Reading Between the Lines on pp. 120–121 answer the following questions.

a. What is the method used to allocate the world’s cut flowers?

b. Who benefits from this method of resource allocation: buyers, sellers, or both? Explain your answer using the ideas of marginal social benefit, marginal social cost, consumer surplus, and producer surplus.

c. On April 19, 2010, when the equilibrium quantity of cut flowers decreased by 20 percent, why was the outcome still efficient? Why was there not underproduction and a deadweight loss?

d. If the government of Holland placed a limit of 15 million a day on the quantity of flowers traded at Aalsmeer, would there be underproduction and a deadweight loss created?

Explain your answer.