Exam 1: The Big Ideas

Estimates suggest that tens of thousands of people have died because the FDA withheld beta-blockers from the market while testing to determine whether the drugs were safe and effective. This is an example of:

Which option best explains why firms develop new ideas for production techniques and product features?

Marginal thinking was simultaneously described by three economists-Stanley Jevons, Carl Menger, and Adam Smith.

In an effort to clean the air, many communities impose restrictions on the burning of garbage. This policy causes more garbage to be buried underground, potentially increasing groundwater contamination. What concept does this example represent?

As the United States becomes more productive at manufacturing chemicals and pharmaceutical drugs, the opportunity cost of producing other items such as textiles ________, leading to _____ demand for foreign textiles.

Which statement is correct regarding the Federal Reserve?

Fluctuations in graduate school enrollment correlate positively with fluctuations in unemployment. What is the most likely reason why?

Air travel from Chicago to Los Angeles costs $800 and takes four hours. A bus ticket between the cities costs $100 and takes 104 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:

Recall Chapter 1's opening story about the British sea captains and the convicted felons. In what way were incentives used to solve the problem of the high mortality rate on board the ships?

What factor is responsible for ending malaria in the United States?

The invisible hand concept is:

Every day people rely on the work of others to provide us with food, clothing, and shelter. These people work for our benefit because:

Most economists believe the Federal Reserve does more good for than harm to the United States economy.

When deciding whether or not to undertake an activity, economists compare:

In Zimbabwe, the government ______ the ______ money, which caused the country's severe inflation.

The economics of trade depends on whether the trading partners live in the same country and share the same language and religion.

The Great Depression was:

Inflation makes it more difficult to figure out the real value of goods.

In his book The Wealth of Nations, Adam Smith explained, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." Explain what Adam Smith meant by this. Be sure to tie your explanation to one or more of the "Big Ideas" in economics discussed in the text.

One benefit of trade is that it: