ECON 102 PSU EXAM 1 STUDY GUIDE
Incentives - Answers -rewards or penalties for engaging in a particular activity
Economics - Answers -The study of how people allocate their limited resources to
satisfy their unlimited wants
Resources - Answers -things used to produce goods and services to satisfy people's
wants
Wants - Answers -what people would buy if their incomes were unlimited
Microeconomics - Answers -the study of decision making undertaken by individuals and
by firms
Macroeconomics - Answers -the study of the behavior of the economy as a whole,
including such economy wide phenomena as changes in unemployment the general
price level, and national income.
Aggregates - Answers -total amounts or quantities.
Rationality Assumption - Answers -The assumption that people do not intentionally
make decisions that would leave them worse off
Models or theories - Answers -Simplified representatives of the real world used as the
basis for predictions or explanations
Ceteris paribus assumption - Answers -The assumption that nothing changes except
the factor factors being studied
Empirical - Answers -Relying on real-world data in evaluation the usefulness of a model
Behavioral Economics - Answers -An approach to the study of consumer behavior that
emphasizes psychological limitations interfere with rational decision making
Bounded Rationality - Answers -The hypothesis that people are nearly, but not fully,
rational, sot hat they can't examine every possible choice available to them but instead
use simple rules of thumb to sort among the alternatives that happen to occur to them
Positive Economics - Answers -Analysis that is strictly limited to making either purely
descriptive statements or scientific predictions; for example, "If A, then B." A statement
of WHAT IS.
Incentives - Answers -rewards or penalties for engaging in a particular activity
Economics - Answers -The study of how people allocate their limited resources to
satisfy their unlimited wants
Resources - Answers -things used to produce goods and services to satisfy people's
wants
Wants - Answers -what people would buy if their incomes were unlimited
Microeconomics - Answers -the study of decision making undertaken by individuals and
by firms
Macroeconomics - Answers -the study of the behavior of the economy as a whole,
including such economy wide phenomena as changes in unemployment the general
price level, and national income.
Aggregates - Answers -total amounts or quantities.
Rationality Assumption - Answers -The assumption that people do not intentionally
make decisions that would leave them worse off
Models or theories - Answers -Simplified representatives of the real world used as the
basis for predictions or explanations
Ceteris paribus assumption - Answers -The assumption that nothing changes except
the factor factors being studied
Empirical - Answers -Relying on real-world data in evaluation the usefulness of a model
Behavioral Economics - Answers -An approach to the study of consumer behavior that
emphasizes psychological limitations interfere with rational decision making
Bounded Rationality - Answers -The hypothesis that people are nearly, but not fully,
rational, sot hat they can't examine every possible choice available to them but instead
use simple rules of thumb to sort among the alternatives that happen to occur to them
Positive Economics - Answers -Analysis that is strictly limited to making either purely
descriptive statements or scientific predictions; for example, "If A, then B." A statement
of WHAT IS.
