ECON B-251 EXAM 1 QUESTIONS WITH CORRECT ANSWERS

economics CORRECT ANSWER the study of satisfying unlimited wants by utilizing limited resources scarcity CORRECT ANSWER unlimited wants and limited resources the economic problem CORRECT ANSWER deals with the problem of scarcity Microeconomics CORRECT ANSWER studies decisions by individual firms and governments Macroeconomics CORRECT ANSWER studies decisions made or actions taken by the entire economy ex. inflation, unemployment, GDP rationality assumption CORRECT ANSWER assumes that people do not intentionally make decisions that would leave them worse off. bounded rationality CORRECT ANSWER assumes people’s rationality is constrained because they do not have full information prospect theory CORRECT ANSWER demonstrates how people react differently to potential loss and potential gain. maximizer CORRECT ANSWER try to make optimal decisions based on the rationality assumption satisficer CORRECT ANSWER try to find a "good enough" solution based on bounded rationality self-interest CORRECT ANSWER pursuit of one's own goals. Maximize happiness. social-interest CORRECT ANSWER choices that are best for society as a whole tradeoff CORRECT ANSWER when we choose one thing, we give up something else non-strategic CORRECT ANSWER decisions based on an individual's or firm's own costs and benefits strategic CORRECT ANSWER decisions based on others' decisions as well as one's cost and benefits