Econ 103 Exam 1 QUESTIONS AND ANSWERS| GRADED A

Econ 103 Exam 1 QUESTIONS AND ANSWERS| GRADED A Economics Correct Answer: The study of peoples choices; how agents choose to allocate scarce resources and how those choices affect society First Principle of Economics Correct Answer: People try to optimize; they try to choose the best available option Second Principle of Economics Correct 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 Correct 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 Correct Answer: the situation of having unlimited wants in a world of limited resources Scarce resources Correct Answer: are things that people want, where the quantity that people want exceeds the quantity that is available Positive economics Correct Answer: analysis that generates objective descriptions or predictions about the world that can be verified with data Normative economics Correct Answer: analysis that prescribes what an individual or society ought to do Microeconomics Correct 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 Correct Answer: The study of the economy as a whole. Optimization Correct Answer: Trying to choose the best feasible option, given the available information Trade Off Correct Answer: Something an economic agent faces when the agent needs to give up one thing to get something else. Budget Constraint Correct Answer: Shows the bundles of goods or services that a consumer can choose given her limited budget Oppotunity Cost Correct Answer: the best alternative use of a resource Cost Benefit Analysis Correct Answer: A calculation that adds up costs and benefits using a common unit of measurement, like dollars. Model Correct Answer: simplified description or representation of the world Scientific Method Correct Answer: The name for the ongoing process that economists and other scientists use to develop models of the world and test those models with data Data Correct Answer: are facts, measurements or statistics that descrive the world Empirical Evidence Correct Answer: A set of facts established by observation and measurement Hypotheses Correct Answer: Predictions that can be tested with data Mean (Average) Correct Answer: The sum of all the different values divided by the number of values Variable Correct Answer: A factor that is likely to change or vary Positive Correlation Correct Answer: Implies that two variables tend to move in the same direction Negative Correlation Correct Answer: Implies that two variables tend to move in opposire directions, When the variables have movements that are not related, we say that the variables have zero correlation