Econ 102Supplementan InstructionsHandout 11. The last time you went to the store milk was $2.5 per gallon. You go to the store with $5 and intend to buy two gallons of milk but find that the price has risen to $3 per gallon. Since you can only buy one gallon of milk you have experienceda. Excess demandb. Excess supplyc. Price ceiling2. An increase in the price of gasoline will most likely causea. An increase in the supply of low mileage cars and the price of low mileage e cars to riseb. A decrease in the supply of low mileage cars and the price of low mileagee cars to fallc. Excess supply in the market for low mileage carsd. The demand for low mileage cars to increase and the the price of low mileage e cars to risee. The demand for low mileage cars to decrease and the price of low mileagee cars to fall3. Given the following tablePrice Quantity Demanded Quantity Supplied10 40 1020 30 1530 20 2040 10 2550 5 30What is the excess demand at price $20? What is the equilibrium price and quantity? What happens when we increase the price to $40?4. What factors influence demand5. ......................is a situation where the quantity supplied exceeds the quantity demanded.6. Our standards of living is directly tied to economic growth becausea. Everyone in society shares equally in the fruits of economic growthb. In most cases economic growth brings improvement in the average person’s standard of livingc. A higher standard of living causes an increase in economic growth7. The unemployment rate is thea. Percent of people who would like to be employed but can’t find a jobb. Fraction of people who are not workingc. Number of unemployed peopled. standard of living8. Assume that net exports are -$340, private investments is $1500, tax revenues are$8000, government purchases are $2000 and GDP using expenditure approach is$9000. In this case consumption expenditure C must bea. $5840b. $12960c. $4360d. $51609. When individuals and firms come together to buy and sell goods r services they forma. An industryb. Demandc. Supplyd. Market10. The law of demand says that as the price of a good rises, the quantity demanded will ……….11. The price of oranges in a city is a(n)a. Macroeconomic statisticb. Microeconomic variablec. Normative value judgment.12. Rapid Economic Growth, stable prices and ..........are the three importantmacroeconomics goals about which most economist agreea. An unemployment rate of zerob. Full employmentc. High inflation13. For the average living standards of a nation to .........., ......... must increase fasterthan the price levela. Increase, nominal GDPb. Decrease nominal GDPc. Decrease, real GDP14. Which of the following might result in an underestimation of Real GDP?a. Sales of used carsb. Many intermediate goods,c. Significant underground trade such as in illegal drugs15. Inventory changes are important in calculating Real GDP becausea. Inventories are important for tax purposesb. They are an example of transfer paymentsc. We want to measure all current production when computing GDP16. Suppose a US car manufacturer produces $200 million worth of cars in 2004 but$50 million went unsold. How much was the company’s contribution to GDPa. $200 millionb. $$250 millionc. $50 milliond. $150 million17. Suppose a company purchases $100 case from a supplier and $300 computer chipfrom another. He sells his computer for $1000. How much has this companycontributed too GDPa. $400b. $1000a.
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