UIUC ECON 102 DiIanni Midterm #1.Final Exam Test 2026\2027.
Economics
The social science that studies production and trade. Economics builds the bridge between
individual values and social order.
Spontaneous order
Order that is the product of human action, but not human design
Micro vs Macro
Micro is econ, macro is a subfield within econ. They cover similar topics.
Why is econ important?
It helps us make better decisions and we learn critical thinking that we can apply to all social
sciences. Econ is helpful for everyone.
Positive analysis
Analysis that attempts to describe the way things are in reality. The "what is". Even if you
say a statement that isn't true, if it is meant to be a fact and not an opinion, then it is still
positive.
Normative analysis
Analysis that describes a value judgement. "What should be".
What is a theory?
An abstract explanation of some phenomenon.
What is a society?
A group of people who have moral, political or economic relationships with each other.
What is a social system?
A set of rules that determine the role of physical force in human relationships
What is a market economy? + examples
A social system in which all resources are privately owned and controlled. Ex: free market,
free enterprise, laissez-faire
What is property right? In context of a market economy
A moral and legal right to control a resource and to exclude others from using it
What is a command economy? + examples
, UIUC ECON 102 DiIanni Midterm #1.Final Exam Test 2026\2027.
A social system in which all resources are collectively owned or controlled, typically through
a government. Ex: Socialism, communism, fascism, syndicalism
What is a mixed economy?
A social system in which some resources are privately owned and controlled, and some are
owned by the government
Starting points of Econ: Scarcity
The amount of goods available is not sufficient to satisfy all human desires (scarcity is
inevitable. at least one resource will forever be scarce)
Starting points of Econ: Unlimited Desires
No matter what one's current circumstance, it is always possible to imagine and achieve a
more desirable state of affairs
Starting points of Econ: Methodological Individualism
The principle that the individual human being is the basic unit of research in social sciences.
Starting points of Econ: Rational choice
People pursue their values. People are goal directed, self-interested and responsive to
incentives.
What is the price system?
A network of interrelated prices of goods and services.
What is the exchange of equivalents theory (4th century BC)?
Aristotle. The theory that people exchange one good for another when both parties value the
goods equally. This isn't true though.
What is the Just Price theory (8th century AD)?
The theory that there is a single just price at which each good should be sold. Sellers always
ask for more and customers always want to pay less. Doesn't work
True or false: Social order requires government planning (mercantilism)
True
Mercantilism: Nominal value of money
The face value of a certain amount of money. Doesn't necessarily translate what you can buy
with the money.
Mercantilism: Real value of money
The goods and services that can be purchased with a certain amount of money.
Economics
The social science that studies production and trade. Economics builds the bridge between
individual values and social order.
Spontaneous order
Order that is the product of human action, but not human design
Micro vs Macro
Micro is econ, macro is a subfield within econ. They cover similar topics.
Why is econ important?
It helps us make better decisions and we learn critical thinking that we can apply to all social
sciences. Econ is helpful for everyone.
Positive analysis
Analysis that attempts to describe the way things are in reality. The "what is". Even if you
say a statement that isn't true, if it is meant to be a fact and not an opinion, then it is still
positive.
Normative analysis
Analysis that describes a value judgement. "What should be".
What is a theory?
An abstract explanation of some phenomenon.
What is a society?
A group of people who have moral, political or economic relationships with each other.
What is a social system?
A set of rules that determine the role of physical force in human relationships
What is a market economy? + examples
A social system in which all resources are privately owned and controlled. Ex: free market,
free enterprise, laissez-faire
What is property right? In context of a market economy
A moral and legal right to control a resource and to exclude others from using it
What is a command economy? + examples
, UIUC ECON 102 DiIanni Midterm #1.Final Exam Test 2026\2027.
A social system in which all resources are collectively owned or controlled, typically through
a government. Ex: Socialism, communism, fascism, syndicalism
What is a mixed economy?
A social system in which some resources are privately owned and controlled, and some are
owned by the government
Starting points of Econ: Scarcity
The amount of goods available is not sufficient to satisfy all human desires (scarcity is
inevitable. at least one resource will forever be scarce)
Starting points of Econ: Unlimited Desires
No matter what one's current circumstance, it is always possible to imagine and achieve a
more desirable state of affairs
Starting points of Econ: Methodological Individualism
The principle that the individual human being is the basic unit of research in social sciences.
Starting points of Econ: Rational choice
People pursue their values. People are goal directed, self-interested and responsive to
incentives.
What is the price system?
A network of interrelated prices of goods and services.
What is the exchange of equivalents theory (4th century BC)?
Aristotle. The theory that people exchange one good for another when both parties value the
goods equally. This isn't true though.
What is the Just Price theory (8th century AD)?
The theory that there is a single just price at which each good should be sold. Sellers always
ask for more and customers always want to pay less. Doesn't work
True or false: Social order requires government planning (mercantilism)
True
Mercantilism: Nominal value of money
The face value of a certain amount of money. Doesn't necessarily translate what you can buy
with the money.
Mercantilism: Real value of money
The goods and services that can be purchased with a certain amount of money.
