Econ 103 Exam 1 Questions and Answers (rated A+)
First Principle of Economics - ANSWER-People try to optimize; they try to choose the best available option Second Principle of Economics - ANSWER-Economic systems tend to be in equilibrium, a situation in which nobody would benefit by changing his or her behavior Third Principle of Economics - ANSWER-Empiricism-analysis that uses data. Economicsts use data to test theories and to determine what is causing thhings to happen in the world Scarcity - ANSWER-the situation of having unlimited wants in a world of limited resources Scarce resources - ANSWER-are things that people want, where the quantity that people want exceeds the quantity that is available Positive economics - ANSWER-analysis that generates objective descriptions or predictions about the world that can be verified with data Normative economics - ANSWER-analysis that prescribes what an individual or society ought to do Microeconomics - ANSWER-The study of how individuals, households, firms, and governments, make choices, and how those choices affect prices, the allocation of resources, and the well being of other agents Macroeconomics - ANSWER-The study of the economy as a whole. Optimization - ANSWER-Trying to choose the best feasible option, given the available information
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