The popular diet drug Redux was removed from the market in August 1997, after a Mayo Clinic report linked the drug to heart valve damage. a . Explain the effect of this action on membership at Gold's Gym, on enrollment at diet centers such as Weight
Watchers, where clients learn to lose weight by exercising and eating right, and on sales of treadmills and exercise bikes. b. Would you expect people to switch to other diet drugs now that Redux has been banned? How would you explain the fact that sales of the most popular, and still legal, diet drug phentermine have plummeted since the Mayo clinic report was released?
a . It should increase demand for membership at Gold's Gym, for membership at Weight Watchers, and
for treadmills and exercise bikes (substitutes for Redux).
b. Yes, you would expect demand for phentermine to increase, ceteris paribus; however, people's taste
for phentermine may have fallen after the Mayo report was issued, because of fear that phentermine,
too, may be harmful.
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Economics is the study of the ________ people make to attain their goals, given their ________ resources
A) decisions; household B) choices; scarce C) purchases; unlimited D) income; available
Suppose there is an increase in the saving rate. This increase in the saving rate must cause an increase in consumption per capita in the long run when
A) capital per worker approaches the golden-rule level of capital per worker. B) the saving is used for education rather than physical capital. C) the rate of saving exceeds the rate of depreciation. D) there is no technological progress. E) technological progress depends on human capital.