How does SET INSET(OBS=n) work with a following WHERE statement?

[mk123451243]

data outset;
   set inset (obs=10);
   where X=Y;

Does this code logic mean:

Select the first 10 observations from inset and select WHERE X=Y from those 10.

OR

Select observations from inset and apply WHERE X=Y until 10 observations have been selected.

I assume the former but there is an ambiguous question/solution in the Base Programming 2 course that is throwing me off:

3. Read only the first 10 observations satisfying the WHERE statement.

set orion.order_fact (obs=10);
   where year(Order_Date)=2009;

[ChrisNZ · Accepted solution]

This: Select observations from inset and apply WHERE X=Y until 10 observations have been selected.

If you have access to SAS, it is a lot faster to test yourself than to ask here, and a much better way to learn as well, by doing.

[PGStats]

Compare test1 with test2

data test1;
set sashelp.class(obs=1);
where name = "John";
run;

proc print data=test1; run;

data test2;
set sashelp.class(obs=1);
run;

proc print data=test2; run;

If the WHERE condition was applied after the observation count, test1 would be empty.

[Kurt_Bremser]

See Maxim 4.