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Exam Questions Johns Hopkins Suggested Reading Syllabus

Johns Hopkins. Income Distribution Theory, Readings and Exams. Machlup, 1950’s

 

 

The following reading list on the theory of income distribution taught by Fritz Machlup in the mid-1950s at Johns Hopkins University was found in a file in the Evsey Domar papers marked “Macroeconomics, Old Reading Lists”. I hadn’t realized until this post that Machlup’s papers are archived at the Hoover Institution, where 45 boxes alone are filled with the archival remains of his academic career. OK, next time.

I remember that my dissertation supervisor, the same Evsey Domar, did not particularly “like” Fritz Machlup. The two of them were at Johns Hopkins in the 1950s, Machlup being a dozen years Domar’s senior. It is not that Evsey Domar would have actually trash-talked Fritz Machlup in front of a student of his, but I do have a vague recollection of Domar judging Machlup’s approach to economics as having been excessively concerned with terminological issues over substantive economics. Also I sensed that Domar considered Machlup to have viewed matters of academic rank and relative status with excessive seriousness. But these memories fall closer to the legend end of the historical spectrum than to those frequencies reserved for documented anecdotes. 

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JOHNS HOPKINS UNIVERSITY
THE THEORY OF RELATIVE INCOMES
18-603, Fall Term 1954-55
Prof. Fritz Machlup

READING LIST

Texts:

  1. American Economic Association, Readings in the Theory of Income Distribution. (Philadelphia: Blakiston, 1946)
  2. Any one of the books on the list below.

 

  1. General Background

Alfred Marshall, Principles of Economics (London: Macmillan, 8th ed. 1936) Books V and VI.

[Handwritten note, “theory of derived demand exp. Ch. 1-6”, apparently referring to Marshall, Book V (“derived demand” found in Chapter 6 of Book V)]

Eugen v. Böhm-Bawerk, Positive Theory of Capital (London: 1891; Reprinted New York, Stechert, 1940) Book III, Ch. X; Book IV, Ch. VII.

Philip H. Wicksteed, The Common Sense of Political Economy. London: Routledge, 1933) Vol. I, Book I, Chapter IX.

Frank H. Knight, Risk, Uncertainty and Profit (Boston: 1921, Repreinted London School of Economic) Part II.

John R. Hicks, Value and Capital (Oxford: Clarendon Press, 1939) Part II.

 

  1. General Equilibrium Theory

Gustav Cassel, A Theory of Social Economy (New York: Harcourt, Brace, 1924) Chapter IV.

Bertil Ohlin, Interregional and International Trade (Cambridge: Harvard Univ. Press, 1933) Appendix I.

George Stigler, Production and Distribution Theories (New York: Macmillan, 1941) Chapter IX and XII.

Joan Robinson, “Euler’s Theorem and the Problem of Distribution” Economic Journal, Vol. XLIV (1934).

 

  1. Marginal Productivity and Substitution

John Bates Clark, The Distribution of Wealth (New York: Macmillan, 1900) Chapter XII and XIII.

Joan Robinson, Economics of Imperfect Competition (London: Macmillan, 1934) Books VII, VIII, IX.

John R. Hicks, The Theory of Wages (London: Macmillan, 1935) Chapter I and VI.

Paul H. Douglas, The Theory of Wages (New York: Macmillan, 1934) Chapter III.

Paul H. Douglas, “Are There Laws of Production?” American Economic Review, Vol. XXXVIII (1948).

Fritz Machlup, “The Commonsense of the Elasticity of Substitution,” Review of Economic Studies, Vol. II (1935).

Richard A. Lester, “Shortcomings of Marginal Analysis for Wage-Employment Problems.” American Economic Review, Vol. XXXVI (1946)

Fritz Machlup, “Marginal Analysis and Empirical Research” American Economic Review, Vol. XXXVI (1946).

Articles by Cassels, Stigler, Chamberlin, Machlup, Robinson, Lange, and Kalecki in A.E.A. Readings.

 

  1. Wage

John R. Hicks, The Theory of Wages Chapters II, III, IV.

Paul H. Douglas, The Theory of Wages Chapter X.

Edwin Cannan, “The Demand for Labour”, Economic Journal, Vol. XLII. (1932)

Fritz Machlup, The Political Economy of Monopoly (Baltimore: Johns Hopkins, 1952) Chapters IX and X.

Articles by Robertson, Robbins, Bloom, Rolph, Reynolds, Lerner, Tarshis, and Dunlop in AEA Readings.

 

  1. Rent

David Ricardo, Principles of Political Economy and Taxation (1st ed. 1817) Chapter II.

Hubert D. Henderson, Supply and Demand (Cambridge: University Press, 1922, Revised, 1932) Chapter VI.

Joan Robinson, Economics of Imperfect Competition, Chapter VIII.

Gordon F. Bloom, “Technical Progress, Costs, and Rent”. Economica IX, New Series (1942)

Articles by Buchanan, and Boulding in AEA Readings.

 

  1. Interest

Eugen v. Böhm-Bawerk, The Positive Theory of Capital, Books II, V, VI, and VII.

Knut Wicksell, Lectures on Political Economy (New York: Macmillan, 1934) Vol. I, Part II, Ch. 2.

John Maynard Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936) Chapters 11, 12, 13 and 14.

Friedrich A. Hayek, The Pure theory of Capital (London: Macmillan, 1941) Chapters III, V, VI, VIII, XI-XIV.

Fritz Machlup, “Professor Knight and the ‘Period of Production’”, Journal of Political Economy, Vol. XLIII (1935).

____________ “The Rate of Interest as Cost Factor and as Capitalization Factor”, American Economic Review, Vol. XXV, (1935)

Articles by Hayek, Knight, Keynes, Robertson, Hicks, Somers, and Lutz, in Readings.

 

  1. Profit

Frank H. Knight, Risk, Uncertainty and Profit, Chapters IX-XII.

Joseph Schumpeter, The Theory of Economic Development (Cambridge: Harvard University Press, 1934) Chapter IV.

Robert Triffin, Monopolistic Competition and General Equilibrium Theory (Cambridge: Harvard University Press, 1940) Chapter V.

Fritz Machlup, The Economics of Sellers’ Competition (Baltimore: Johns Hopkins, 1952), Chapters VII and VIII.

Articles by Knight, Hart, Gordon, and Crum, in Readings.

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Project, Papers of Evsey Domar, Box 15, Folder “Macroeconomics, Old Reading Lists”.

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THE JOHNS HOPKINS UNIVERSITY
The Theory of Relative Incomes
18-603

January 21, 1953

Professor Fritz Machlup

Answer three questions, one from each group.

Write on loose sheets of paper; start a new sheet for each question.
Identify each sheet by the Question Number in the left corner and your Examination Number (which you draw before the examination) in the right corner; your name should appear nowhere.(I.

  1. Describe in words, without using any symbols, the Walrasian system of general equilibrium, stating the essential assumptions, the variables assumed to be given, and the unknowns to be derived.

II.

  1. Discuss the influence of different types of inventions on the marginal productivity of labor. Indicate also their probably effects on the total income of the labor class and on its relative share in the national income.
  2. Dennis H. Robertson divides the effects which “an artificial raising of the wages” is apt to have upon employment into “two analytically separable reactions”, first, “a movement along the existing [marginal productivity] curve,” and second, “a cumulative lowering of the curve”. Explain the two reactions and indicate what assumptions concerning other factors of production, especially capital, are involved.

III.

  1. State the three grounds on which Böhm-Bawerk bases his explanation of the existence of interest and discuss whether each or any of them constitutes a necessary and/or sufficient condition of the existence of interest. (You may avoid committing yourself to the arguments expressed by attributing them to “some writers”.)
  2. Without indicating your own opinions or inclinations, present both sides in the controversy between Frank H. Knight and the “Austrians” with respect to the following points:
    1. that all capital is conceptually perpetual or conceptually non-permanent;
    2. that economic progress may result in a “shortening” of the investment period;
    3. that an increase in the supply of capital need not change the original factors of the remote past.

Source: Johns Hopkins University. Eisenhower Library, Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 6, Exams, 1956-62. Box 3/1, Folder “Graduate Exams, 1933-1965”.

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THE JOHNS HOPKINS UNIVERSITY
THEORY OF RELATIVE INCOMES
18.603

January 1957

Professor Fritz Machlup

Answer four questions, one from each part.

Write on loose sheets of paper; start a new sheet for each question.
Identify each sheet by the Question Number in the left corner and your Examination Number (which you draw before the examination) in the right corner; your name should appear nowhere.
You are on your honor not to use notes or to give or accept advice.

PART I.

  1. A product, X, is made from three “ingredients” or factors of production, A, B, and C, all of which are necessary and can be used only in a fixed proportion. Total output of X is 1000 units per unit of time; the product sells at a price of $100 per unit. The factor costs per unit of product are $60 for A, $30 for B, and $10 for C. The supplies of A and B are perfectly elastic to the industry. The demand for X has an elasticity of -2. The industry is competitive both in its buying and selling.
    Assume that the quantity of C which is available to the industry is reduced by 20 per cent. Calculate the elasticity of the industry’s derived demand for C. Show your reasoning step by step.
  2.      a. Define or explain the concept of elasticity of substitution as it is used by Mrs. Robinson.
    1. Is it “technical” substitution or “total” substitution which is involved in Mrs. Robinson’s concept? What is the difference between the two substitutabilities?

PART II.

  1. Discuss various concepts of “bargaining power” in the labor market, commenting on the selection of criteria, the problem of measurability, and the uses to which the concepts are put.
  2. Ricardo says in the chapter “On Rent” of his Principles of Political Economy and Taxation: “If the high price of corn were the effect, and not the cause of rent, price would be proportionately influenced as rents were high or low, and rent would be a component part of price. But that corn which is produced by the greatest quantity of labor is the regulator of the price of corn; and rent does not and cannot enter in the least degree as a component part of its price.” Discuss. Take account of the possibility that land has other uses besides the production of corn.

PART III.

  1. Without indicating your own opinions or inclinations, present both sides in the controversy between Frank H. Knight and the “Austrians” with respect to the following points:
    1. that all capital is conceptually perpetual or conceptually non-permanent;
    2. that economic progress may result in a “shortening” of the investment period;
    3. that an increase in the supply of capital need not change the original factors of the remote past.
    4. that it is not possible to identify the contributions of the original factors of the remote past.
  2. On p. 208 of his Lectures, Vol. I, Wicksell quotes the following statement by Gustav Cassel: “A man who attaches the same importance to future needs as to present ones, if he expects to be able to provide for his needs in the future just as easily as he does now, has no reason for setting aside anything of his present income.” According to Wicksell, “Cassel is not quite correct” inasmuch as his “argument actually presupposes the absence of any rate of interest.” Explain.

PART IV.

  1. What, if anything, does general-equilibrium theory contribute to the understanding or development of income-distribution theory?
    In order to facilitate a thoughtful discussion of this question it is suggested that you treat it in three parts:

    1. The function of a theory of relative incomes. (What is it designed to do? What kind of general principles or conceptual schemes seem to be useful in developing a theory of income distribution?)
    2. The essentials of general-equilibrium theory. (What is it designed to do and how? What do we learn from it?)
    3. The contribution, or lack of it, of general-equilibrium systems to the theory of relative incomes.

 

Source: Johns Hopkins University. Eisenhower Library, Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 6, Exams, 1956-62. Box 3/1, Folder “Graduate Exams, 1933-1965”.

Image Source:  Fritz Machlup page  at the website Austrian Economics Center.

 

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Exam Questions Harvard

Harvard. Graduate economic theory exams. Taussig, 1930-35

 

Today I am relieved to post the final batch (1930-1935) of enrollment data and examination questions for Frank W. Taussig’s core economic theory course. All in all nearly a half-century run for Harvard’s Grand Old Man.

Previous batches of transcribed exams are provided via the links below.

Examinations for 1887-90
Examinations for 1891-94
Examinations for 1897-1900
Examinations for 1904-09
Examinations for 1911-14
Examinations for 1915-17
Examinations for 1918-19 [Bullock and Carver]
Examinations for 1920-22
Examinations for 1923-25
Examinations for 1926-30

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1930-31

Course Enrollment: Economics 11
1930-31

[Economics] 11. Professor Taussig.—Economic Theory

Total 58: 50 Graduates, 1 Senior, 7 Radcliffe.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1930-31, p. 77.

 

1930-31
HARVARD UNIVERSITY
ECONOMICS 11
Mid-year Examination

Arrange your answers in the order of the questions.
One question may be omitted.

  1. In an examination paper set at Harvard College in 1876 the following question appears: “What is the error in the proposition that high wages make high prices?”
    What answer would have been expected from a student at that time? What answer would you give now?
  2. “The latent influence by which the values of things are made to conform in the long run to the cost of production is the variation that would otherwise take place in the supply of the commodity. The supply would be increased if the thing continued to sell above the ratio of its cost of production, and would be diminished if it fell below that ratio. But we must not therefore suppose it to be necessary that the supply should actually be either diminished or increased. . . . There is no need that there should be any actual alteration of supply; and when there is, the alteration, if permanent, is not the cause, but the consequence of the alteration in value. If, indeed, the supply could not be increased, no diminution in the cost of production would lower the value: but there is by no means any necessity that it should. The mere possibility often suffices.”
    Is this in accord with Mill’s analysis of demand and supply? with Marshall’s? with business experience?
  3. Can you distinguish between “supply price” and “expenses of production” in the following cases:
    1. the temporary equilibrium of supply and demand;
    2. accountants’ figures of cost for agricultural produce;
    3. accountants’ treatment of depreciation in the accounts of a manufacturing enterprise.
  4. In an examination paper set at Cambridge University, England, in 1929, the following appears: “From the point of view of economic principle, analyze the return obtained to-day from fen land drained in the seventeenth century?”
    What answer would Ricardo or Mill have given? What answer would be expected now from a student in Cambridge, England? What from a student in Cambridge, Mass.?
  5. (1) Marshall’s final conclusion as to the tenability of a distinction between interest and rent.
    (2) The following passages:

“The deepest and most important line of cleavage in economic theory” [is] “the distinction between the quasi-rents which do not, and the profits which do, directly enter into the normal supply prices of produce for periods of moderate length.”
“When the artisan or professional man has once obtained the skill required for his work, a part of his earnings are for the future really a quasi-rent of the capital and labour invested in fitting him for his work, in obtaining his start in life, his business connections, and generally his opportunity for turning his faculties to good account; and only the remainder of his income is true earnings of effort. But this remainder is generally a large part of the whole. And here lies the contrast. For when a similar analysis is made of the business man, the proportions are found to be different: in his case the greater part is quasi-rent.”

Is there inconsistency, apparent or real?

  1.    a.  Adam Smith’s remark, that the division of labor is limited by the extent of the market, has been said to state the gist of all there is to be said about external economies.
    1. It has been said, again, that the only internal economies which signify as regards economic theory are those accruing from the growth of production on a large scale.
    2. “If a commodity obeys the law of increasing return, an increase of demand causes much more of it to be produced, — more than if the commodity obeyed the law of constant return, — and at the same time lowers its price. . . . This line of reasoning has been thought by some writers to lend support to the claim that a Protective duty on manufactured imports in general increases the home market for those manufactured goods; and, by calling into play the Law of Increasing Return, ultimately lowers their price to the home consumer.”
    3. Consider these, separately or as a whole.
  1.     a. “Let us suppose that every one owns whatever capital he uses . . . and is not only of equal capacity, but of equal willingness to work, and does in fact work equally hard; also that all work is unskilled, — or rather, unspecialized in this sense, that if any two people were to change occupations, each would do as much and as good work as the other one had done.”
    1. “Let us suppose that labor is not of one industrial grade, but of several; that parents always bring up their children to an occupation of their own grade; that they have a free choice within that grade, but not outside it. Let us suppose, further, that the increase of population in each grade is governed by other than economic causes; it may be fixed, or may be influenced by changes in custom, in moral opinion, etc.”
    2. What would govern relative wages under each of these suppositions? What would govern the value of goods? Which supposition underlies Marshall’s conclusions on the relation between wages and value?

 

 

1930-31
HARVARD UNIVERSITY
ECONOMICS 11
Final Examination

Answers questions 1, 2, 3 briefly; 4 and 5 more at length.

  1. Jevons remarked: “Capital, as I regard it, consists merely in the aggregate of those commodities which are required for sustaining laborers of any kind or class engaged in work. . . . The single and all-important function of capital is to enable the laborer to await the result of any long-lasting work, — to put an interval between the beginning and the end of an enterprise.”
    Wherein does this resemble, wherein differ from, the view of Ricardo? Böhm-Bawerk? Marshall? Clark?
  2. Public encouragement or discouragement for industries of increasing, constant, or decreasing returns, — wherein the analysis of Pigou resembles that of Marshall, wherein differs.
  3. The bearing on the national dividend and its maximization, of the price structure obtaining under —

Simple competition,
Simple monopoly,
Joint supply,
Discriminating monopoly.

  1. Are there grounds for considering “profits” as an element in distribution different from wages, interest, rent?
  2. The doctrine that wages are determined by the marginal productivity of labor; the grounds on which it rests; and the aid it may give on such questions as the (1) basis of fair wages in the arbitration of industrial disputes, and the (2) effect on contractual wages of a compulsory system of social insurance (accident, sickness, old age, unemployment).

____________________________________

1931-32

Course Enrollment: Economics 11
1931-32

[Economics] 11. Professor Taussig.—Economic Theory

Total 48: 38 Graduates, 4 Seniors, 1 Business School, 5 Radcliffe.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1931-32, p. 72.

 

HARVARD UNIVERSITY
1931-32
ECONOMICS 11
Mid-year Examination

Arrange your answers in the order of the questions.
One of the first six questions may be omitted.

  1. “The Classical Economists appreciated the necessity of a fund to support labour during the period of production; but they overlooked the continuous character of production and output, and confused the working capital, which is provided by continuously feeding the flow of available income back into the machine of process, with the liquid capital (goods in stock) at the commencement of any period of process. [Liquid capital is elsewhere defined as “goods yielding nothing, but capable of being used or consumed at any time”; it does not include goods in the hands of merchants.] They did not clearly perceive that the capital to keep labour in employment is found, not in the stocks of goods already available, nor by the abstention from the consumption of available income, but by decisions which have the effect (a) of determining what proportions of the goods emerging from the machine of process are in fixed and in liquid form respectively, and (b) of applying the flow of available income in one way instead of in another, namely, by supporting productive consumers instead of unproductive consumers.” M. Keynes.
    Does the error here described appear in the Classical Economists? and is the criticism of their treatment of abstention valid?
  2. “Marshall’s treatment [of supply] is highly elliptical. A striking illustration of his tendency to telescope his argument is his common practice in his graphs of labelling cost curves and supply curves alike with the symbols s-s’, conventionally used for supply curves, and thus diverting the attention of his readers , and perhaps also occasionally his own attention, from the necessity of selecting from the many possible types of cost curve that one which in the given circumstances alone has claims to being considered as also a supply curve.” Is Marshall open to this criticism? Illustrate and comment.
  3. The bearing (if any) of the concept of a representative firm on the theory of value, of rent, of business profits.
  4. Explain the method by which one can derive the supply price of a commodity produced under conditions of joint supply; that by which one can derive the demand price of a commodity demanded under the conditions of joint demand.
    What bearing, if any, have these methods of analysis on the phenomena of value and distribution in a society which is economically stratified?
  5. “When the artisan or professional man has once obtained the skill required for his work, a part of his earnings are for the future really a quasi-rent of the capital and labour invested in fitting him for his work, in obtaining his start in life, his business connections, and generally his opportunity for turning his faculties to good account; and only the remainder of his income is true earnings of effort. But this remainder is generally a large part of the whole. And here lies the contrast. For when a similar analysis is made of the profits of the business man, the proportions are found to be different: in his case the greater part is quasi-rent.”
    Is the greater part of the earnings of business men to be regarded as quasi-rent? Is the remainder only to be regarded as true earnings of effort?
  6. “The extra income derived from rare natural abilities bears a closer analogy to the surplus produce from the holding of a settler who has made an exceptionally lucky selection, than to the rent of land in an old country.” Is this extra income in the nature of a quasi-rent, in either case?

Not to be omitted.

  1. The following have been suggested, by one writer or another, as the grounds on which the distinction between interest and rent turns:
    1. Land is fixed in amount, instruments made by man are not.
    2. Land is an instrument made by man in essentially the same sense as is any other kind of capital-good; its industrial serviceability and its availability are the result of man’s action.
    3. Competition equalizes the returns on instruments but not those on land.
    4. The returns on land and instruments alike depend on marginal productivity.

Give your own views (briefly) on each point; and sum up with a statement of your conclusion on the tenability of the distinction.

 

HARVARD UNIVERSITY
1931-32
ECONOMICS 11
Final Examination

Arrange your answers in order of the questions.

  1. “With regard to utility, two views are commonly held. The older and more naïve is that an increment of supply (which should always be a continuous stream and not a stock) makes its specific addition to the utility of the total, without affecting the utility of the earlier increments. This is the basis for the familiar utility curve with the implication of consumer’s surplus. On the other hand, it may be held that the utility of all increments is always alike, the addition of each increment to the total bringing down the utility of the earlier ones to the level of its own. Both these views lead to nonsensical results: the first to fantastic magnitudes for total utilities, and the second to the conclusions that the utility of a larger supply may be less than that of a smaller and consequently that people often choose and pay for a reduction in utility.”
    Do these nonsensical results necessarily follow?
  2. “Pure profits are at once necessary and probably non-existent.” What is meant by “pure profits” in this statement? Given the meaning, what do you say to it?
  3. What is the influence of technological improvements on the rate of interest? what the influence of the rate of interest on technological improvements?
  4. “It is obvious that an increase in the supply of capital instruments will make for an increase in the national dividend as a whole. Can it at the same time make for a decrease in the real income of labour? The analysis relevant to this question has been developed by Marshall…. This analysis shows, first, that every factor of production, including entrepreneurs’ work, tends to be remunerated at a rate equivalent to its marginal net product of commodities in general. It shows, secondly, that, other things being equal, the marginal net product, in this sense, of every factor diminishes as the supply of the factor increases beyond a fairly low minimum. This proposition expresses what may be called the law of diminishing returns to individual factors of production. This law must not be confused with the law of diminishing returns to resources in general invested in a given occupation….”
    How far was this analysis developed by Marshall? Are the two laws not to be confused?
  5. Does an elastic demand for one commodity necessarily imply that the demand for some other commodity is inelastic?
  6. What grounds are there for the statement that in Great Britain the elasticity of the aggregate demand for labor is immensely greater than unity?

____________________________________

 1932-33

Course Enrollment: Economics 11
1932-33

[Economics] 11. Professor Taussig.—Economic Theory

Total 42: 33 Graduates, 1 Junior, 6 Radcliffe, 2 Others.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1932-33, p. 66.

 

HARVARD UNIVERSITY
1932-33
ECONOMICS 11
Mid-year Examination

  1. The original and indestructible powers of the soil; what part they play in Ricardo’s treatment of rent, what in Marshall’s.
  2. “If, for simplicity of exposition, we leave out of account raw materials, the stream of floating capital is constituted almost entirely of wage-goods — goods that are paid over (through money) as wages. Thus, the larger the addition to the normal stream of floating capital that business men can secure in response to a given rise in their interest offer, due to a given improvement in their expectations, the larger proportionately will be the addition made to the real demand for labour. . . .
    “When a boom comes, a large part of the impact is always likely to be upon industries engaged in instrumental trades: and, plainly, extra work there will not lead to an addition to the flow of wage goods — floating capital — for a considerable time. Some part of the primary effect will, however, touch the industries that make these goods and, so far as it does this, we shall have an extra flow of them available to pay for extra labour. This was the important point that the doctrine of the Wages Fund ignored. It must be noticed, however, that this source of additions to floating capital (i.e. extra work) is only available, roughly speaking, so long as unemployed workers are available to be called into industry. If expectations and the desire to employ workpeople go on expanding after this point has been passed, the source is no longer available, and, consequently, the element of elasticity which it accords to the supply of floating capital no longer exists.”
    Was “the important point” here noted in conflict with the Wages Fund doctrine? and is the statement otherwise in conflict with that doctrine?
  3. The tendency of profits to a minimum; how treated by Ricardo, by Mill, by Cairnes?
  4. Explain, with the utmost brevity and precision,

“real cost” of production,
expenses of production,
supply price,
marginal cost,
bulk line cost.

  1. “It may be conceded that if a certain class of people were marked out from their birth as having special gifts for some particular occupation, and for no other, so that they would be sure to seek out that occupation in any case, then the earnings which such men would get might be left out of account as exceptional, when we are considering the chances of success or failure for ordinary persons.”
    Consider whether, given the premise, the conclusion here stated would follow; what is the bearing of the reasoning on Walker’s theory of business profits; what Marshall would say of premise and conclusion.
  2. What bearing, if any, on the concept of non-competing groups do you find on a consideration of, —
    1. universal education, general and technical;
    2. the influence of conventional necessaries;
    3. the representative firm;
    4. the law of derived demand for a commodity demanded jointly with other commodities.

 

HARVARD UNIVERSITY
1932-33
ECONOMICS 11
Final Examination

  1. “Ricardo appears to have seen distinctly almost everything of primary importance in the scientific doctrine of capital, very much as it is known now.” Marshall.
    If so, wherein? If not, wherein not?
  2. — The price of wheat raised on good land is the same as that of wheat raised on the marginal zone, and it affords a surplus above wages and interest paid by farmers for labor and capital used in the tilling of the good land.
    — The existence of this surplus in its original form, that of wheat, affects the supply and the price of that product.
    — The price of cloth woven on good looms is the same as that of equally good cloth woven on marginal ones, and it affords a net surplus above the cost of maintaining the stock of looms and the wages and interest paid by manufacturers for further capital used in connection with the good looms.
    — The existence of this surplus in its original form, that of cloth, affects the supply and the price of this product.
    Discuss (1) the bearing of these statements on the older distinction between capital and land, and (2) the connection between these surpluses and price.
  3. “The diminishing return which arises from an ill proportioned application of the various agents of production into a particular task has little in common with the broad tendency to the pressure of a crowded and growing population on the means of subsistence. . . . It has no very close connection with the tendency of agriculture in an old country to yield a diminishing return to a general increase of resources well applied in cultivation: and indeed exactly parallel cases can be found of a diminishing return to particular resources when applied in undue proportion, even in industries which yield an increasing return to increased applications of capital and labour when appropriately distributed.”
    Is this statement in accord with the general current of economic theory at the present time? Do you agree with it?
  4. “An increase in the supply of capital . . . will make for an increase in the national dividend as a whole. Can it at the same time make for a decrease in the real income of labour? The analysis relevant to this question has been developed by Marshall. Subject to certain important qualifications, which do not affect the present argument, this analysis shows, first, that every factor of production, including entrepreneurs’ work, tends to be remunerated at a rate equivalent to its marginal net product of commodities in general. It shows, secondly, that, other things being equal, the marginal net product, in this sense, of every factor diminishes as the supply of the factor increases beyond a fairly low minimum. . . . This proposition expresses what may be called the law of diminishing returns to individual factors of production. This law must not be confused with the law of diminishing returns to resources in general invested in a given occupation.”
    Wherein does this distinction differ from that contained in the preceding extract? Do you agree with it?
  5. Consider whether it is (1) justifiable, (2) practicable to “charge what the traffic will bear”
    1. when there is a large element of overhead costs;
    2. when there is a large element of joint cost;
    3. when there is simply monopoly;
    4. when there is discriminating monopoly.

____________________________________

1933-34

Course Enrollment: Economics 11
1933-34

 

[Economics] 11. Professor Taussig.—Economic Theory

Total 20: 11 Graduates, 2 Seniors, 5 Radcliffe, 2 Business School.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1933-34, p. 85.

 

HARVARD UNIVERSITY
1933-34
ECONOMICS 11
Mid-year Examination

One question may be omitted.

  1. “The foundations of the theory [of cost of production and value] as they were left by Ricardo remain intact.” Does Marshall’s treatment of the relation of “general wages” to value bear out this statement? of differences of wages?
  2. Explain
    1. Internal economies of large-scale production.
    2. External economies of large output.
    3. External dis-economies of large output.
  3. “Ricardo, and the economists of his time generally were too hasty in deducing this inference [tendency to increased pressure] from the law of diminishing return; and they did not allow enough for the increase of strength that comes from organization. But in fact every farmer is aided by the presence of neighbours, whether agriculturists or townspeople. . . If the neighbouring market town expands into a large industrial centre, all his produce is worth more; some things which he used to throw away fetch a good price. He finds new openings in dairy farming and market gardening, and with a larger range of produce he makes use of rotations that keep his land always active without denuding it of any of the elements that are necessary for its fertility.” Do you agree?
  4. “The flow of investment of resources for future needs consists of two streams. The smaller consists of new additions to the accumulated stock: the larger merely replaces that which is destroyed; . . . The annual flow of this second stream is probably not less than a quarter of the total stock of capital, even in a country in which the prevailing forms of capital are as durable as in England. It is therefore not unreasonable to assume for the present that the owners of capital in general have been able in the main to adapt its forms to the normal conditions of the time, so as to derive as good a net income from their investments in one way or another.” Has this any bearing on the doctrine of quasi-rent?
  5. If the values of goods were proportional to their real costs, would the utility curve and the demand curve be the same, for persons receiving labor incomes?
  6. What is to be said
    1. of the necessaries of life, as regards elasticity of demand, consumer’s surplus, value and differences of wages;
    2. of conventional necessaries, in the same particulars?
  7. — “The price of wheat raised on good land is the same as that of wheat raised on the marginal zone, and it affords a surplus above wages and interest paid by farmers for labor and capital used in the tilling of the good land.
    — “The fact that farmers pay landlords for this surplus has no effect on the price of wheat.”
    — “The price of cloth woven on good looms is the same as that of equally good cloth woven on marginal ones, and it affords a net surplus above the cost of maintaining the stock of looms and the wages and interest paid by manufacturers for further capital used in connection with the good looms.
    — “The fact that entrepreneurs pay capitalists for this surplus has no effect on the price of cloth.”

What bearing have these passages on the theory of rent? of business profits?

 

HARVARD UNIVERSITY
1933-34
ECONOMICS 11
Final Examination

Arrange your answers in the order of the questions.

  1. Is interest treated as a derivative from “profits”

by Ricardo,
by Marshall,
by Böhm-Bawerk,
by those writers who regard profits as appearing only in a “dynamic” state?

Your own view?

  1. “There is always an interval between the setting to work of a man and the emergence, in consequence of his work, of any finished product, whether for consumption or as a productive instrument for the machine of industry. . . . What is essential is the time interval between the centre of gravity of the labour employed and the output (or, more strictly, the sale) of the finished product. I shall call this interval the period of production.”
    Wherein is the period of production here considered like, and wherein unlike, that discussed by F. A. Walker? by Böhm-Bawerk? For what purposes of economic analysis is the period described in the extract appropriate?
  2. “Autonomous” and “induced” inventions: their bearing on “increasing returns” and on the marginal productivity theorem.
  3. Reflections suggested by a Rembrandt, as regards
    1. market price;
    2. total utility and consumers’ surplus;
    3. the distinction between “wealth” and “capital.”
  4. The problems and distinctions implied in the terms

Economic Welfare,
National Dividend,
Marginal Social Net Product.

____________________________________

 1934-35

Course Enrollment: Economics 11
1934-35

 

[Economics] 11. Professors Taussig and Schumpeter.—Economic Theory

Total 27: 21 Graduates, 1 Senior, 5 Radcliffe.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1934-35, p. 81.

 

 

Reading List for Economics 11, Fall Semester 1934

Posted from Wolfgang Stolper’s course notes.

HARVARD UNIVERSITY
1934-35
ECONOMICS 11
Mid-year Examination

One question may be omitted. Arrange your answers in the order of the questions.

  1. “Suppose that society is divided into a number of horizontal grades, each of which is recruited from the children of its own members; and each of which has its own standard of comfort, and increases in numbers rapidly when the earnings to be got in it rise above, and shrinks rapidly when they fall below that standard. Suppose, then, that parents can bring up their children to any trade in their own grade, but cannot easily raise them above it and will not consent to sink them below it. . . .”
    Suppose also that there is free competition as regards the earnings of capital.
    On these suppositions what would be the relation between

    1. the values of commodities and their “real cost”;
    2. the values of commodities and their money costs;
    3. the values of commodities and their supply prices?
  2. “Internal economies of large-scale production are primarily a long-run phenomenon, dependent upon appropriate adjustment of scale of plant to each successive output. They should not be confused with the economies resulting from ‘spreading of overhead.’” Why or why not to be thus confused?
    “Internal economies of large-scale production are independent of the size of output of the industry as a whole, and may be accruing to a particular concern whose output is increasing at the same time that the output of the industry as a whole is undergoing a decline.” Why or why not?
  3. Does quasi-rent have the same meaning in the following passages?
    1. “The quasi-rent of farm buildings.”
    2. “When the artisan or professional man has once obtained the skill required for his work, a part of his earnings are for the future really a quasi-rent of the capital and labour invested in fitting him for his work, in obtaining his start in life, his business connections, and generally his opportunity for turning his faculties to good account; and only the remainder of his income is true earnings of effort. But this remainder is generally a large part of the whole. And here lies the contrast. For when a similar analysis is made of the profits of the business man, the proportions are found to be different: in his case the greater part is quasi-rent.”
    3. “In relation to normal value the earnings of high ability are to be regarded as a quasi-rent rather than as a rent proper.”
  4. It is fatal to the conception of consumers’ surplus to admit:
    1. that differences in income make it impossible to measure satisfactions;
    2. that each unit of a homogeneous supply yields ipso facto the same satisfaction as every other unit;
    3. that the satisfaction indicated by the high price paid for an article having “prestige value” will disappear when the article becomes cheap.
  5. Does “capital,” as distinguished from “capital goods,” serve to synchronize the effort of labor with the reward for labor? If so, how? If not, why not?
  6. Explain the distinctions
    1. between the intensive and the extensive margins of cultivation for land;
    2. the intensive and the extensive zones of indifference in the application of labor;
    3. the marginal product of labor and the product of marginal labor.

State summarily your opinion of the usefulness of the distinctions as tools of analysis.

 

Course outline and final exam for Economics 11, Spring Semester 1935

Transcribed from Joseph Schumpeter’s papers and posted earlier.

Source for examination questions: Harvard University Archives. Prof. F. W. Taussig, Examination Papers in Economics 1882-1935 (Scrapbook).

Image Source: Frank W. Taussig in Harvard Class Album, 1934.

Categories
Exam Questions M.I.T.

M.I.T. General Exams in Economic Fluctuations: 1950, -52, -54, -56

 

There does appear to be a pattern at M.I.T. of having every second year a general examination for the subject of business fluctuations in this collection of exams for the period 1950-56. It is also possible that Paul Samuelson only served on the examination committee every-other year. Still we can be happy to have a series of four general exams on this topic for MIT covering the first half of the 1950s.  In a previous post, Economics in the Rear-view Mirror transcribed Domar’s stash of general exams in macro that covers the 1960s.

_________________

James Hanson

GENERAL EXAMINATION
in
ECONOMIC FLUCTUATIONS AND POLICY
October 6, 1950

Answer question 1, and three of the remaining questions.

  1. (1 hour) What areas in the analysis of the determination of the level of real income are least satisfactory at the present time? Criticize in detail the shortcomings of one of these areas.
  2. What are some of the statistical and conceptual difficulties met in distinguishing between gross and net national product? For what purposes is this distinction important?
  3. Outline a positive role for the Federal Reserve authorities in shaping the aggregate level of economic activity. Discuss and appraise the difficulties the authorities will face.
  4. What contributions to the theory of the business cycle and economic growth are suggested by the study of the relationships between the level of income and the stock of capital?
  5. Governmental expenditures on national defense are going to rise to a new level, $20 billion per year higher than the existing one. This level will be maintained for three years and then will fall back to the present one. What fiscal policies would you recommend to cope with this situation? Appraise the feasibility of your program and compare it with alternative economic policies.
  6. What do you conceive to be the role of forecasting in stabilization policy?

 

_________________

GENERAL EXAMINATION IN
BUSINESS FLUCTUATIONS

9:00-12:00 n.
Friday
May 9, 1952

ANSWER ALL QUESTIONS
(1 hour)

  1. (1 hour) Discuss the use and limitations of national-income data in planning alternative mobilization policies.
  2. (½ hour) Discuss and appraise the effectiveness, both theoretic and practical, of automatic fiscal-monetary devices. In your answer give examples from the economic literature.
  3. (½ hour) “We solemnly explain that excise taxes are deflationary because they raise prices, that is, because they are inflationary.” Comment critically on the above quotation.
  4. (½ hour) Appraise the effect of the Wage Stabilization Board’s Steel-wage recommendations on the level of real and money national income.
  5. (½ hour) Indicate the contribution of two of the following to the understanding of economic fluctuations.
    Wicksell; Kuznets; Mitchell; Metzler; Klein; Lange

    _________________

GENERAL EXAMINATION IN ECONOMIC FLUCTUATIONS
May 19, 1954

Answer any four questions.

  1. It has been said that the Keynesian system of income analysis contains no explicit supply considerations. Appraise this criticism, with particular reference to Keynes as well as later writers.
  2. How would you go about testing the empirical validity of the Colin Clark hypothesis that inflation results whenever the level of taxation and expenditure exceed 25 percent of “national income”?
  3. “Obviously, under-employment equilibrium with flexible wages is impossible.” Discuss.
  4. What are the relevant economic considerations in choosing between tighter money, higher personal-income taxes, or lower government expenditures as a means of closing an inflationary gap.
  5. Some writers claim that the business cycle of the interwar and earlier periods has disappeared as an economic phenomenon. What structural changes in the U.S. economy of the last 15 years would account for their attitude? Do you agree or disagree with the conclusion of these writers?
  6. “There is a cyclical fluctuation in business-cycle theories. Earlier theories embodied a theory of cumulative movement and a theory of turning points. Later work showed that a single set of relationships could explain both and now there is a trend back toward the earlier explanations.” Discuss, citing specific authors.
  7. Will an increase in the desire of households to save change the rate of interest? Explain.
  8. “For both political and economic reasons fiscal policy is more successful in a depression, whereas monetary policy is superior in a boom.” In discussing this statement draw on your knowledge of the operation of monetary and fiscal policy in the United States over the past three decades.

_________________

GENERAL EXAMINATION IN BUSINESS FLUCTUATIONS
September 12, 1956

Answer any five questions.

  1. “There is a cyclical fluctuation in business-cycle theories. Earlier theories embodied a theory of cumulative movement and a theory of turning points. Later work showed that a single set of relationships could explain both; and now there is a trend back toward the earlier explanations.” Discuss, citing specific authors.
  2. Discuss briefly the issues for national income accounting raised by two or more of the following:
    1. gross and net national product
    2. government activities
    3. desire for welfare interpretations
  3. Summarize briefly our knowledge of capitalism’s historical business cycles. What views does this experience lead you to?
  4. “Economic forecasting is both an art and a science.” “Economic forecasting is neither an art nor a science.” Appraise the current status of economic forecasting.
  5. What are the important policy problems of economic stabilization? Be comprehensive and specific.
  6. What contributions to the theory of the business cycle and economic growth are suggested by the study of the relationships between the level of income and the stock of capital?
  7. “We solemnly explain that excise taxes are deflationary because they raise prices, that is, because they are inflationary.” Comment critically on the above quotation.

 

Source: Duke University. David M. Rubenstein Rare Book & Manuscripts Library. Economists’ Papers Archive. Paul Samuelson Papers, Box 33, Folder “Teaching Exams 1952, 1956”

Image Source: M.I.T., Technique 1950.

Categories
Chicago Exam Questions Suggested Reading

Chicago. Price Theory Exams. Albert Rees (Chicago PhD Alum 1950), 1962

 

 

Albert Rees (1921-1992) received his B.A. from Oberlin College (1943), M.A. (1947) and Ph.D. (1950) from the University of Chicago. He worked himself up the ranks at the University of Chicago (Assistant Professor, 1948-54; Associate Professor, 1954-61; Professor, 1961-66), serving as chair from 1962-1966. He moved on to chairing the economics at Princeton where he was professor (1966-79). He also served as a staff economist at the President’s Council of Economic Advisers and headed President Gerald Ford’s Council on Wage and Price Stability, 1974-75.  Besides once serving as Provost of Princeton University, Albert Rees also served as the President of the Sloan Foundation.

See The Elgar Companion to the Chicago School of Economics, Ross B. Emmett (ed.), Chapter 12 “Albert Rees” by Orley Ashenfelter and John Pencavel. [Downloadable as working paper.]

___________________________

PRICE THEORY
Economics 300
Autumn, 1962
Mr. Rees

Chapter assignments will be given in class.

American Economic Association, Readings in Price Theory. Irwin, 1952.

Friedman, Milton, Essays in Positive Economics. University of Chicago Press, 1953.

Leftwich, Richard H., The Price System and Resource Allocation, revised edition. Holt, Rinehart and Winston, 1961.

Marshall, Alfred, Principles of Economics, 8th edition, Macmillan, 1922.

Stigler, George, The Theory of Price, revised edition. Macmillan, 1952.

___________________________

Economics 300
Midterm Examination

November 7, 1962
A. Rees

  1. (50 points) Answer the following True, False, or Uncertain and explain your answer briefly. Your score depends on your explanation.
    1. In a free market economy, all consumers participate equally in determining what will be produced.
    2. A free market economy gives ample incentives to conserve natural resources provided that it is clear who owns each unit of the resources.
    3. The cross-elasticity of demand between substitutes is positive.
    4. If two linear demand curves each intersect the price axis, (q =0) the one that has the higher intercept is more elastic at this quantity.
    5. An increase in the price of beef will increase the demand for pork and decrease the demand for beef.
    6. If the market for eggs is in equilibrium an increase in supply will cause only a small change in price.
    7. The elasticity of demand for oranges is greater in absolute value than the elasticity of demand for fruit.
  2. (25 points)
    1. Show by means of an indifference map (axes: oranges and grapefruit) the effect on the consumption of oranges of an increase in their price, the price of grapefruit remaining unchanged. Distinguish the income and the substitution effects. State whether you have used the Hicks or the Slutsky method.
    2. How would your map have differed if the axes had been bread and meat? If they had been bread and butter?
  3. (25 points) Increased costs cause manufacturers to reduce the size of 5 cent chocolate bars from 2-1/2 ounces to 2 ounces. Because the bars are smaller, people eat more of them and consumption rises from 10,000 bars a week to 11,000.
    1. Can these events be shown on an ordinary supply and demand diagram? If so, show them. If not, explain why.
    2. Can the elasticity of demand for chocolate be computed? If so, compute it. If not, explain.

___________________________

FINAL EXAMINATION

Economics 300
December 12, 1962
A. Rees

  1. (50 points) Answer each of the following “true,” “false,” or “uncertain” and explain your answer briefly. Your score will depend heavily on your explanation.
    1. If two linear demand curves have the same slope at the same price, then at that price the one for which quantity is largest is least elastic.
    2. An important difference between an indifference map and an isoquant map is that indifference curves never cross.
    3. An important difference between the utility functions depicted by usual indifference maps and production functions is that distances in utility space can be ordered but not measured.
    4. The following conditions are necessary and sufficient for the short-run maximization of monopoly profits: (a) Marginal revenue is equal to marginal cost; (b) price is greater than average variable cost.
    5. An increase in fixed cost caused by an increase in the rate of interest on long run term debt will increase long-run marginal cost but not short-run marginal cost.
    6. An effective legal minimum wage above the prevailing wage will increase the employment of a firm that is a monopsonist in the labor market.
    7. The costs of owner-operated businesses are generally understated because the owners do not pay themselves wages. If they did, the accounting costs would be equal to the economic costs.
    8. The way to produce a given output in the long run at lowest cost is to construct the plant whose short-run average costs are at a minimum at that output.
    9. If a monopolist maximizes profit in the short-run and operates where total revenue is at a maximum, he has no variable costs.
    10. A production function shows constant returns to scale if an increase of 10 per cent in the input of one factor will increase output by 10 per cent.
  2. (20 points) The New York, Ridgewood, and Exurban Railroad operates a commuter passenger service. Two kinds of reduced fares are offered: (1) children under 12 years of age ride at half-fare at all times. (b) on Wednesdays there are special half-fare tickets for adults good on trains leaving after 10:00 a.m. and returning before 4:30 p.m. The railroad has been accused by the New Jersey Commerce Commission of being a discriminating monopolist. Can you defend it against this charge with respect to either or both of its half-fare arrangements? If it is in fact a discriminating monopolist with respect to either arrangement, is it promoting an inefficient use of resources by its pricing practices?
  3. (15 points) (a) Draw the short-run cost curves, demand curve, and marginal revenue curve of a monopolist who is suffering a short-run loss and is minimizing this loss. Indicate the amount of the loss on your diagram. (b) Show the same situation by means of short-run total cost and total revenue curves.
  4. (15 points) A farmer has two plots of land on which he grows corn, plot A and plot B. The following table shows the amount of corn he can produce on each plot with varying applications of fertilizer of a given quality.

Fertilizer Used

 Plot A Plot B
(pounds)

(output in bushels)

0

 10

8

1

 14 13
2 16

17

3

 17 20
4 18

21

5

 17

20

If the price of fertilizer is $1.50 per pound and the price of corn is $1.00 per bushel, how much fertilizer will he use on each plot? (The figures are not intended to be realistic.) Under what circumstances would he use four pounds on each plot?

 

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Albert Rees Papers, Box 1, Folder “Economics 300”.

Image Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Albert Rees Papers, Box 1, Folder “Rees Personal”.

Categories
Barnard Exam Questions

Barnard. Exam for one-semester outlines of economics course. Moore and Johnson, 1903

 

 

 

The following introductory economics exam from Barnard College in 1903 comes from a student’s college scrapbook that had been donated to the archives of her alma mater. The scrapbook belonged to Gertrude Helen Clark, who, according to  the Register of the Associate Alumnae of Barnard College (1925), married Frederick M. Hitchcock in 1917. Because such random singletons are quickly forgotten, I prefer to post them immediately. Similar to Radcliffe, Barnard could count on faculty from the patriarchal side of campus to provide instructors. Professor Henry L. Moore and the up and coming Alvin S. Johnson were definitely prime offerings for Barnard.

Incidentally, there is a nice website set up to celebrate the 125th anniversary of the founding of Barnard where one finds a list of the names of all Barnard College economics faculty starting with John Bates Clark up to most recent times.

______________________

Course Announcement

Economics and Social Science

Economics A—Outlines of Economics. Study of the characteristics of modern industrial society and of the fundamental economic principles. Professor [Henry L.] Moore and Mr. [Alvin Saunders] Johnson [Tutor in Political Economy and Sociology]. One and one-half points, first half-year.

Section I, Tu., Th., S., 9.30; Section II, Tu., Th., 11.30, S. 9.30; Section III (if needed), Tu., Th., 1.30, S., 9.30.

Prescribed for Juniors. Open to qualified Sophomores who take Course I.
This course is given in two or, if necessary, in three sections. Students are assigned to the sections in alphabetical order, but for reasons of weight, with the consent of the Dean, a student may be transferred to a section other than that to which she properly belongs.

 

Source: Columbia University, Barnard College Catalogue, 1901-02. Announcement 1902-1903, p. 59. 

______________________

BARNARD COLLEGE
Economics A
Mid-year Examination, [Jan. 27,] 1903

 

  1. Define wealth, capital, land; rent, demand, utility, marginal utility, value, price.
  2. What determines market value? normal value?
  3. State the law of diminishing returns.
  4. What are the economic reasons for the concentration of industry?
    Is there an economic limit to concentration?
  5. State the law of monopoly value.
  6. What determines the value of money?
  7. Assuming that the United States has a monetary circulation of 500,000,000 in gold, what will be the effect of an issue of 100,000,000 in legal tender paper money
    1. On prices within the United States
    2. On the foreign trade of the United States
    3. On the value of gold throughout the world.
  8. If a day’s labor in America will produce more yards of cotton cloth than a day’s labor in England, will the cotton industry need protection? Should it receive protection?
  9. How does a high standard of living affect wages?
  10. Discuss the “scope” of Economics.

 

Source:  Barnard College Archives. Gertrude C. Clark Hitchcock Scrapbook, 1898-1906, p. 48.

Image Source: Art and Picture Collection, The New York Public Library. “Barnard College, western boulevard” New York Public Library Digital Collections. Accessed February 24, 2018.

Categories
Exam Questions Harvard

Harvard. Junior political economy final examination. Green, 1870

 

 

In a previous post I transcribed the final exam questions for Francis Bowen’s senior year course “Political Economy” at Harvard, 1868-69. In that post you will also find biographical information.

In the following year, 1869-70, “Political Economy” was  offered to seniors in the first term (Bowen’s text-book). It was also taught (with a different text-book: Rogers) in the second term of the junior year.

_______________________________

From the Annual Report of the President of Harvard College, 1869-70

[There are four subjects and four instructors listed for the required subjects for second term Juniors in 1869-70 according to the annual report of the president of Harvard College.]

 

Required Studies. Text-books Number of students Number of Sections Number of Exercises per Week Number of Hours per Week
Instructors. Subjects.
Mr. O. W. Holmes, Jr. Constitutional Law Alden’s Science of Government

158

 4 1

4
Mr. N. St. J. Green Philosophy Hamilton’s Metaphysics;
Rogers’s Political Economy

158

 3 3

9
Prof. Bowen Forensics (four)

158
Prof. Lovering Physics Lectures

158

 2 1

2

 

Textbook:   James E. Thorold Rogers, A Manual of Political Economy for Schools and Colleges. Oxford: Clarendon Press, 1868.

 

Source: Harvard University. Annual Report of the President of Harvard University, 1869-1870, p. 38.

_______________________________

POLITICAL ECONOMY

  1. Is a hard bargain, voluntarily entered into, an advantage to both parties, or a disadvantage to one? Why, and how?
  2. What is the cause of value? What is the measure of value?
  3. What is Capital? Profit? Wages? Rent?
  4. What are the causes which determine the Wages of Labor?
  5. What is the effect of laws regulating the rate of Interest? How do they produce that effect?
  6. What is meant by Demand and Supply? Give an illustration of the price of an article being affected by Demand. Give one of its being affected by Supply.
  7. Is Capital equally distributed to all kinds of Labor? If it is, why is it? If it is not, why is it not?
  8. What are the proper functions of Government?
  9. What are the general principles of Taxation?
  10. Why are the Precious Metals used as Money? How are they distributed?

 

Jun. Ann. June, 1870.

 

Source: Harvard University Archives. Harvard University. Final Examinations 1853-2001. Box 1, Folder “Final examinations, 1869-1870”.

 

Image Source:  Portrait of Francis Bowen from the Harvard Square Library (Unitarian Universalism). The Harvard Book: Portraits.

 

Categories
Exam Questions Harvard Syllabus

Harvard. Principles of Economics. James Tobin’s Student Reading Assignments, 1936-37

 

A few posts ago I provided a transcription of a bibliography of supplementary readings for Harvard’s principles of economics course in 1938-39.  While not uninteresting and indeed suggestive of the breakdown of topics and associated canonical texts, the bibliography provided little insight to the actual course coverage.

To remedy this I took a deep dive into James Tobin’s sophomore year notes for the course that run  260 consecutively numbered, clean hand-written notes for his readings along with brief summaries of the content of the section meetings. I have written down the exact sequence of readings he took notes on and have included the dates of the sections that give us approximate windows for when he did the readings. For the record, Tobin got an A in the course which hardly surprises. Other students could have fallen far short on the reading, but not Tobin!

The two main texts by Taussig and Slichter come as no surprise. Ten chapters were also assigned from a draft book manuscript by McIsaac and Smith that was published the following year. Tobin was fairly exact and consistent in identifying the chapter numbers and titles in his reading notes for Taussig and Slichter. His chapter titles for McIsaac and Smith differ quite substantially from those of the printed textbook, so I have included both.

To complete the set, I have included two semester final exams with this post.

______________________

Course Announcement

Economics A. Principles of Economics

Tu., Th., Sat., at 11. Professor Burbank and Dr. J. R. Walsh, and other members of the Department.

Economics A may be taken by properly qualified Freshmen with the consent of the instructor.

Source:  Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences during 1936-37.   Official Register of Harvard University,  Vol. XXXIII, No. 42 (September 23, 1936) p. 141.

______________________

Primary Course Texts

Taussig, Frank W. Principles of Economics 3rd ed. Volume I; Volume II.

Slichter, Sumner H. Modern Economic Society. New York: Henry Holt and Company, 1931.

McIsaac, Archibald MacDonald and James Gerald Smith. Introduction to Economic Analysis. Boston: Little, Brown and Company, 1937.

“The authors gratefully acknowledge the many constructive criticisms and the friendly co-operation offered by the instructors in Economics A at Harvard University, where a preliminary edition of the text was used in during 1936-37.”

______________________

 Reading Notes Sequence
James Tobin, 1936-37

Official beginning of classes Thursday October 1, 1936.

Taussig.

Chapter 1 [Wealth and Labor]

Slichter.

Chapter I [The Control of Economic Activity]
Chapter 3 [Free Private Enterprise],

Section
Tuesday 10/6/36

Taussig.

Chapter 2 [Of Labor in Production];

Slichter.

Chapter 2 [Some Fundamental Economic Concepts]

Section
Thursday 10/8/36, Saturday 10/10/36

Slichter.

Chapter 3 [Free Private Enterprise],

Taussig.

Chapter 3 [The Division of Labor and the Development of Modern Industry]
Chapter 4 [Large-Scale Production]

Slichter.

Chapter 7 [Large Business Units]
Chapter 5 [Machine Industry]
Chapter 6 [Specialization]

Section
Saturday 10/17/36

Taussig.

Chapter 5 [Capital]
Chapter 8 [Introductory: Exchange, Value, Price]

Slichter.

Chapter 4 [Modern Industry—A Capitalistic Organization]
Chapter 11 [Modern Industry—A Credit Economy]

Section
[no date]

McIsaac & Smith.

Chapter I [Notes: The Approach to Economic Analysis. Book: Nature and Purpose of Economic Analysis]
Chapter II [Notes: Contemporary Economic Background. Book: Production and Income in the Modern Economy]
Chapter III [Notes: Economic Valuations. Book: The Mechanism of Exchange]
Chapter IV [Notes: Factors Affecting Demand. Book: Consumer Demand]
Chapter V [Notes: Methods of Determinaing Prices. Book: Analysis of Supply: Cost of Production]

Section
Tuesday 11/10/36, Thursday 11/12/36, Saturday 11/14/36

McIsaac & Smith

Chapter VI [Notes: Current Supply Price. Book: Current Price Adjustment: Competitive Conditions]
Chapter VII [Notes: Current Supply Price and Costs of Production. Book: Current Price Adjustment: Monopolistic Conditions]

Section
Tuesday 11/17/36, Thursday 11/19/36

McIsaac & Smith

Chapter VIII [Notes: Dynamic Supply Price & Costs of Production. Book: Normal Tendencies in Price Adjustment]
Chapter IX [Notes: Price Spreads. Book: Supply and Price under Dynamic Conditions]

Section
Tuesday 12/1/36

Slichter.

Chapter 8 [Modern Business Organizations]

Section
Thursday 12/3/36

Slichter.

Chapter 17 [Public Authority as a Determinant of Price—The Problem in General]
Chapter 18 [Public Authority as a Determinant of Price—Public Utility Rates]
Chapter 19 [Public Authority as a Determinant of Price—The Stabilization Operations of the Federal Farm Board]
Chapter 22 [The Position of the Consumer]

Section
Tuesday 12/15/36, Thursday 12/17/36

Slichter.

Chapter 21 [The Determination of the Price Level]

Taussig.

Chapter 17 [The Precious Metals. Coinage]
Chapter 18 [The Quantity of Money and Prices]
Chapter 19 [The Cost of Specie in Relation to its Value]
Chapter 20 [Bimetallism]
Chapter 21 [Bimetallism, continued. The Displacement of Silver]
Chapter 23 [Government Paper Money]
Chapter 22 [Changes in Prices]

Section
Thursday 1/14/37

Taussig.

Chapter 24 [Banking and the Medium of Exchange]
Chapter 25 [Banking Operations]

Slichter.

Chapter 11 [Modern Industry—A Credit Economy]

Section
Tuesday 2/9/37, Thursday 2/11/37

Slichter.

Chapter 11 [Modern Industry—A Credit Economy]

Taussig.

Chapter 30 [The Theory of Prices Once More]

Section
Saturday 2/13/37, Tuesday 2/16/37, Thursday 2/18/37, Saturday 2/20/37

Taussig.

Chapter 32 [The Foreign Exchanges]
Chapter 33 [The Balance of International Payments]
Chapter 34 [The Theory of International Trade. Why Particular Goods are Exported or Imported]
Chapter 36 [Protection and Free Trade. The Case for Free Trade]
Chapter 37 [Protection and Free Trade, continued. Some Arguments for Protection]

Section
Tuesday 2/23/37, Thursday 2/25/37, Saturday 2/27/37

Slichter.

Chapter 29 [International Economic Policies—Restrictions on Imports and Exports]

Section
Tuesday 3/2/37, Thursday 3/4/37

McIsaac & Smith.

Chapter 10 [Notes: Demand for Indirect Uses. Book: Producer’s Demand]

Section
Saturday 3/6/37, Tuesday 3/9/37

Taussig.

Chapter 38 [Interest on Capital used in Production. The Conditions of Demand]
Chapter 39 [Interest, continued. The Equilibrium of Supply and Demand]
Chapter 40 [Interest, Further Considered]
Chapter 42 [Rent, Agriculture, Land Tenure]
Chapter 43 [Urban Site Rent]
Chapter 44 [Rent, concluded.]

Section
Saturday 3/13/37, Tuesday 3/16/37, Thursday 3/18/37, Saturday 3/20/37

Taussig.

Chapter 47 [Differences of Wages. Social Stratification]
Chapter 52 [The General Level of Wages]
Chapter 53 [Population and the Supply of Labor]
Chapter 54 [Population, continued.]

Slichter.

Chapter 9 [The Organization of Labor]

Section
Saturday 3/27/37, Tuesday 3/30/37, Thursday 4/1/37, Saturday 4/3/37

Taussig.

Chapter 49 [Business Profits]
Chapter 50 [Business Profits, continued.]
Chapter 51 [Great Fortunes]
Chapter 55 [Inequality and its Causes. Inheritance]

Encyclopedia of Social Sciences–Article on Population

Meade, James. on Population [in An Introduction to Economic Analysis and Policy, 1936] Part IV, chapter II [The Optimum Supply of Labour].

Hansen, Alvin. Theory of Population, Growth and Decline [Chapter XII in Economic Stabilization in an Unbalanced World, 1932.]

Section
Thursday 4/15/37, Saturday 4/17/37,
Tuesday 4/20/37, Thursday 4/22/37, Saturday 4/24/37,
Tuesday 4/27/37, Thursday 4/29/37, Saturday 5/1/37, 
Tuesday 5/4/37, Saturday 5/8/37,
Tuesday 5/11/37, Thursday 5/13/37,
Tuesday 5/18/37,
Thursday 5/27/37

Taussig.

Chapter 62 [Railways]
Chapter 63 [Railway Problems, continued]
Chapter 64 [Public Ownership and Control]
Chapter 65 [Combinations and Trusts]
Chapter 45 [Monopoly Gains]

Slichter.

Chapter 16 [Monopoly and Custom as Determinants of Price]
Chapter 28 [The Support of the State]

Silverman, Herbert Albert. Taxation; Its Incidence and Effects. London: Macmillan, 1931.

Chapter 5. General Principles of Incidence.

Slichter.

Chapter 20 [The Business Cycle]

Wooton, Barbara. Plan or No Plan. New York: Farrar & Rinehart, 1935.

Chapter 1. The Nature of an Unplanned Economy.
Chapter 2. Nature of Russian Planned Economy.
Chapter 3. Achievements and Possibilities of an Unplanned Economy.

 

Source: Sequence of readings assemble from Yale University Archives. James Tobin Papers. Box 7, Volume Economics A.

______________________

1936-37
HARVARD UNIVERSITY
ECONOMICS A
Mid-Year Final Examination 

Part I
Answer TWO of the following three questions

  1. “In the long run the factors which are of importance in explaining prices are different from those which are of importance in the short run.” Discuss critically.
  2. Explain and distinguish between the determination of prices under conditions of:
    1. Indirect or monopolistic competition.
    2. Pure competition.
  3. “Both monopolies and monopolistic competition (indirect competition) may lead to an uneconomical use of the factors of production.” Discuss.

 

Part II
Answer all questions

  1. In view of the tremendous advantages accruing to the large unit of production, how can one explain the continued existence, and in some lines of industry and trade, the prevalence of the small scale enterprise?
  2. Discuss (a) the process of formation and (b) the function of the country’s capital equipment.
  3. “It is highly doubtful whether from a social point of view the advantages of the corporate form of enterprise outweigh its disadvantages.” Discuss.
  4. “Everybody knows that the trouble with this country is a shortage of money. You know it to be true in your case; I know it to be true in mine. My plan is simple. On Christmas morning — at the very time when extra cash will be appreciated — I propose to give every man, woman, and child a brand new dollar bill for every dollar he or she now has.” Discuss.

 

1936-37
HARVARD UNIVERSITY
ECONOMICS A
Year-End Final Examination 

Part I

  1. Hour essay on quotation (a) or (b).
    1. “In a price economy the factors of production are so distributed that the goods most desired by consumers are produced by the most efficient methods. A control planning board could at best only duplicate the results which in an unplanned economy are achieved without conscious effort.”
    2. “Most of our economic troubles are ascribable to the fact that we are half way between laissez-faire and free competition on the one hand and a planned economy on the other. Thus we get many of the evils of both without the benefits of either.” Discuss with special reference to the “evils” and “benefits,” and give your opinion as to where the balance lies.

 

Part II
Write on each question of this part.

  1. It is said that wages are determined by:
    1. the law of supply and demand,
    2. the process of bargaining—individual and collective—between workers and employers,
    3. Social stratification—i.e. non-competing groups.Can these explanations be reconciled with the marginal productivity theory?
  2. Some economists have denied that interest corresponds to a real cost of production as wages correspond to labor. They say that interest is rather a surplus above actual cost, and a measure of capitalistic exploitation of wage-earners. According to them interest would not arise in a communist economy.
    Do you agree? Why or why not?

 

Part III
Write on any TWO of the following.

  1. “Lately our imports of goods have been increasing faster than our exports. If this tendency continues it will eventually bankrupt the country. We can no more continue to pay out more than we take in than can a business man afford to have outgo continually in excess of income.”
  2. Explain the mechanism by which an increase in aggregate bank reserves will affect the level of prices.
  3. Discuss the causes of industrial fluctuations and the public action that might ameliorate them.
  4. A tax on unimproved land will not be shifted but a tax on factory buildings probably will be shifted. Do you agree? Why or why not?

Source: Harvard University Archives. Department of Economics. Course reading lists, syllabi, and exams 1913-1992 (UA V 349.295.6), Box 1, Folder “Economics I, Final Exams 1913-1939”.

 Image Source: James Tobin’s senior year portrait in Harvard Class Album, 1939.

 

Categories
Exam Questions Harvard

Harvard. Exams from Principles of Economics. Day, Davis, Burbank et al., 1917-18

 

 

For most students who go on to concentrate in economics, the principles of economics course is the first contact with the discipline. Like they say, you have only one try to make a first impression. We’ll see in a coming post that Taussig’s textbook Principles of Economics still served as the backbone of the Harvard principles course twenty years later.

________________________

Course Description

INTRODUCTORY COURSES
Primarily for Undergraduates

[Economics] A. Principles of Economics. , Th., Sat., at 11. Asst. Professor Day and Dr. Davis, Dr. Burbank and Messrs. P. G. Wright, Monroe, Lincoln, and Van Sickle.

Course A gives a general introduction to economic study, and a general view of Economics for those who have not further time to give to the subject. It undertakes an analysis of the present organization of industry, the mechanism of exchange, the determination of value, and the distribution of wealth.

The course is conducted partly by lectures, more largely by oral discussion in sections. Taussig’s Principles of Economics is used as the basis of discussion.

Course A may not be taken by Freshmen without the consent of the instructor.

 

Source: Division of History, Government, and Economics. 1917-18. Official Register of Harvard University, Vol. XIV, No. 25 (May 18, 1917) p. 58.

________________________

Course Enrollment

[Economics] A. Asst. Professor Day and Asst. Professor J. S. Davis, Dr. Burbank, Mr. Monroe, and Dr. E. E. Lincoln.—Principles of Economics.

Total 258: 1 Graduate, 8 Seniors, 73 Juniors, 150 Sophomores, 3 Freshmen, 23 Other.

 

Source: Harvard University. Report of the President of Harvard College, 1917-18, p. 53.

________________________

1917-18
HARVARD UNIVERSITY
ECONOMICS A
Mid-year Final Examination

Plan your answers carefully before writing. Write concisely. Arrange your answers strictly in the order of the questions, beginning each on a new page.

  1. What is labor? To what extent is it irksome? How, if at all, is the irksomeness of labor to be minimized?
  2. Explain “producers’ surplus.” Under what conditions of cost does it arise? How is monopoly profit to be distinguished from producers’ surplus? Illustrate throughout by diagram.
  3. “Before the war started the bullion value of the U.S. silver dollar, measured in gold, was about 42c. At this rate it took 37 ounces of silver to equal one of gold. Today [October, 1917], with silver bullion at about $1.00 an ounce, the value of a silver dollar is 77c., a ratio of about 20 to 1. It would only take another advance such as occurred within the last month for silver to reach the U.S. coinage ratio of ‘16 to 1.’”
    In this case what would happen, and why? Would the consequences be objectionable? If so, on what grounds? If not, why not?
  4. Explain briefly: (a) commercial banking; (b) “deposits as currency”; (c) bank reserves; (d) Federal Reserve notes; (e) Gold Settlement Fund.
  5. Analyze the factors contributing to the present “high cost of living.”
  6. “The nations of the world should adopt a uniform system of currency with a common standard. This would do away with all this bother about ‘par of exchange,’ ‘gold points,’ ‘rate of exchange,’ etc.”
    To what extent is this conclusion warranted? Explain.
  7. To what extent does the following offer a solution of the tariff problem?
    “In all tariff legislation the true principle of protection is best maintained by the imposition of such duties as will equal the difference between the cost of production at home and abroad.”
  8. Comment briefly upon the following:
    “During the days and weeks and months ahead there must be no cessation or lessening of effort on the part on any one of us—man or woman—to keep business healthy and normal.
    “Industries of every kind must be maintained to their fullest capacity. Money must be kept in circulation. There must be no hysterical, misguided retrenchment, masquerading under the cloak of economy.
    “The nation calls for every encouragement and support that the commercial and industrial forces can supply—and that means everybody doing his bit to keep business booming.”

 

Source: Harvard University Archives. Department of Economics, Course reading lists, syllabi, and exams 1913-1992 (UA V 349.295.6). Box 1, Folder “Economics I, Final Exams 1913-1939”.

________________________

 1917-18
HARVARD UNIVERSITY
ECONOMICS A
Year-end Final Examination

Plan your answers carefully before writing. Write concisely. Arrange your answers strictly in the order of the questions, beginning each on a new page.

  1. What factors tend to limit the extension of (a) large-scale production in agriculture? (b) large-scale production in manufacture? (c) large-scale management, or industrial combination?
  2. Explain briefly: (a) demand; (b) decreasing cost; (c) internal economies; (d) “dumping.”
  3. State carefully: (a) Gresham’s law; (b) the law of diminishing returns; (c) the law of monopoly price; (d) Malthus’s law of population.
  4. To what extent and for what reasons should taxes be employed in financing the present war?
  5. In what respects are business profits like, in what unlike, (a) wages? (b) rent?
  6. What practical expedients would you suggest for raising the wages of workers in the lowest social group?
  7. Discuss the following contention: “One objection to having the state pay people when they are ill or old or out of work is that it saps that personal initiative and prudence and foresight which lie at the basis of an orderly civilization.”
  8. What grounds are there for saying that under a socialistic régime the efficiency of the rank and file of workers would be (a) greater? (b) less?

 

Source: Harvard University Archives. Department of Economics, Course reading lists, syllabi, and exams 1913-1992 (UA V 349.295.6). Box 1, Folder “Economics I, Final Exams 1913-1939”.

Categories
Exam Questions Harvard

Harvard. Introductory Economics. Mid-Year and Final Exams, 1938-39

 

A supplementary bibliography for Harvard’s introductory economics course along with the enrollment data were transcribed for the previous post. The final exams for both semesters of this two semester course are transcribed below. A transcription of the first multiple-choice exam for introductory economics at Harvard (1948!) has also been posted.

_______________________

1938-39
HARVARD UNIVERSITY
ECONOMICS A
Mid-year Final Examination

Choose and SIX questions

  1. “Large-scale production and the modern corporation have rendered obsolete such concepts as private property, free enterprise and individual initiative.” Do you agree?
  2. “The only thing which has kept large business units from crowding out small units in every part of the economic system has been the willingness of the small operators to stand continual losses in order to retain their independence.” Discuss.
  3. “The principal function of commercial bank credit is to make unnecessary the physical transfer of metallic and paper money. Commercial banks merely hold balances in the form of these types of money for a depositor and enable him to transfer claims to this money to other depositors.” Do you agree? Explain fully.
  4. “Assume that Congress had voted that the ‘Federal Reserve Board be commissioned to stabilize the price level.’” How, would you suggest, should the Federal Reserve Board go about it?
  5. Because of unsettled political conditions abroad, the pickup of general business conditions here, and the undervaluation of the dollar relative to other currencies, there has been lately a steady influx of gold into this country.
    1. Discuss the adjustments you would expect to take place if the so-called automatic gold standard were in effect.
    2. Discuss the adjustments possible under a managed gold standard.
  6. What would be the effect on prices and output of a lowering of the price of the raw materials used in a purely competitive industry? Discuss from the short and long run point of view.
  7. “A single department store carries 19 toothpastes and 15 toothpowders, which are only a fraction of the total varieties of these articles. That this is wasteful and uneconomical is beyond argument, but it would not be so easy to prove it keeps up the price of toothpaste in general. The very competition in these items of which we see evidence in all national advertising probably tends in the other direction.” Discuss.

 

 

1938-39
HARVARD UNIVERSITY
ECONOMICS A
Year-End Final Examination

I

(One hour and one-half.)

Write on BOTH of the following in this section. Choose either ONE as a subject for an hour essay, marking it as such.

  1. “Defenders of the competitive system rest their case upon the operation of a price system which secures the optimum utilization of the factors of production. This point of view, however, completely ignores the realities of the situation.” Discuss.
  2. “Business spending depends upon business prospects; business prospects depend upon consumer expenditures; but consumer expenditures depend upon business spending. Thus we face a dilemma from which there is no escape.”

 

II

Write on any THREE of the following:

  1. “The fact that there are ten million unemployed is sufficient evidence that our population is too large. A gradually declining population is to be welcomed rather than feared, since it would in time eliminate the unemployed surplus.” Discuss.
  2. “The rate of wages in a particular plant depends mainly on the bargaining strength of the workers and the employer. The workers can therefore always raise their wages by organizing into a trade union.” Discuss.
  3. “The free traders would have us turn the whole earth into one free market, with the result that the standard of living in every nation would in time become approximately equal. Thus although the ‘have-not’ nations would be better off, this would be because of a corresponding sacrifice on the part of the ‘have’ nations. The protective tariff protects our standard of living.” Discuss.
  4. “Of one thing we can be sure, any tax on land cannot be shifted.” Discuss.
  5. “It is a truism that demand and supply determine the rate of interest. The important thing is to know what factors affect the demand for and supply of capital.” Discuss.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Lloyd Appleton Metzler Papers, Box 9, Folder “Econ A”. Also in Harvard University Archives. Department of Economics, Course reading lists, syllabi, and exams 1913-1992, Box 1, Folder “Economics I: 1939-1962”.

 

 

 

Categories
Exam Questions Harvard

Harvard. Graduate core economic theory exams and enrollments. Taussig, 1926-30

 

 

Examination questions spanning just over a half-century can be found in Frank Taussig’s personal scrapbook of cut-and-pasted semester examinations for his entire Harvard career. Up to the time when Schumpeter took over the core economic theory course from Taussig in 1935, Taussig’s course covering economic theory and its history was a part of almost every properly educated Harvard economist’s basic training. Taussig’s exam questions have been previously posted for the academic years 1886/87 through 1889/90 along with enrollment data for the course;  material for this course (including semesters when taught with/by other instructors) from 1890/91 through 1893/94; 1897-1900 ; 1904-1909 ; 1911-14 ; 1915-1917; 1918-1919 ; 1920-22 ; 1923-25 have been posted as well.  

This post begins with the printed course description from 1929-30 then adds the enrollment data and five years of semester final examinations for the years 1925-26 through 1929-30.

____________________________________

 Course Description
1929-30

11. Economic Theory.

Mon. , Wed., Fri., at 2. Professor Taussig

Course 11 is intended to acquaint the student with the development of economic thought since the beginning of the nineteenth century, and at the same time to train him in the critical consideration of economic principles. The exercises are conducted mainly by the discussion of selected passages from the leading writers; and in this discussion the students are expected to take an active part. A careful examination is made of the writings of Ricardo and J. S. Mill, and of representative modern economists.

 

Source:  Division of History, Government, and Economics, 1929-30. Official Register of Harvard University, Vol. XXVI, No. 36 (June 27, 1929), p. 71. Identical course description found in Official Register of Harvard University, Vol. XXV, No. 29 (May 26, 1928), p. 70.

____________________________________

1925-26

 

Course Enrollment: Economics 11
1925-26

[Economics] 11. Professor Taussig.—Economic Theory

Total 50: 36 Graduates, 5 Graduate Business, 2 Seniors, 6 Radcliffe, 1 Other.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1925-26, p. 77.

 

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Mid-year Final Exam
1925-26

Arrange your answers in the order of the questions

  1. “The ordinary bargain between labor and capital is that the wage-receiver gets command over commodities in a form ready for immediate consumption, and in exchange carries his employer’s goods a stage further towards being ready for immediate consumption. But while this is true of most employees, it is not true for those who finish the processes of production. For instance, those who put together and finish watches, give to their employers far more commodities in a form ready for immediate consumption, than they obtain as wages. And if we take one season of the year with another, so as to allow for seed and harvest time, we find that workmen as a whole hand over to their employers more finished commodities than they receive as wages.”
    Do you see anything to criticize in this?
  2. (a) “In estimating the exchangeable value of stockings, for example, we shall find that their value, comparatively with other things, depends on the total quantity of labour necessary to manufacture them and bring them to market. First, there is the labour necessary to cultivate the land on which the raw cotton is grown; secondly, the labour of conveying the cotton to the country where the stockings are to be manufactured, which includes a portion of the labour bestowed in building the ship in which it is conveyed, and which is charged in the freight of the goods; thirdly, the labour of the spinner and the weaver; fourthly, a portion of the labour of the engineer, smith, and carpenter, who erected the buildings and the machinery. . . . The aggregate sum of these various kinds of labour determines the quantity of other things for which these stockings will exchange.”
    (b) “Suppose one man employs one hundred men for a year in the construction of a machine, and another man employs the same number of men in cultivating corn. . . .
    Suppose that for the labour of each workman £50 per annum were paid, or that £5000 capital were employed and profits were 10 per cent, the value of the machine as well as of the corn, at the end of the first year, would be £5500. The second year the manufacturer and farmer will again employ £5000 each in the support of labour, and will therefore again sell their goods for £5500; but the man using the machine, to be on a par with the farmer, must not only obtain £5500 for the equal capital of £5000 employed on labour, but must obtain a further sum of £550 for the profit on £5500, which he has invested in machinery, and consequently his goods must sell for £6050. Here, then, are capitalists employing precisely the same quantity of labour annually on the production of their commodities, and yet the goods they produce differ in value on account of the different quantities of fixed capital, or accumulated labour, employed by each respectively.”Is Ricardo’s reasoning tenable, on his own premises, in both cases? Are the premises the same in both?
  3. “To popular apprehension it seems as if the profits of business depend on prices. A producer or dealer seems to obtain his profits by selling his commodity for more than it costs him. . . . Demand — customers — a market for the commodity, are the cause of the gain of the capitalist.” What would Mill say to this? Ricardo?
  4. The effective desire of accumulation; the rate of profits as dependent on the cost of labor; the tendency of profits to a minimum, — are the doctrines of Mill on these topics consistent with each other? With what Ricardo laid down?
  5. “The cost of production [of agricultural produce] on the margin of the profitable application of capital and labour is that to which the price of the whole produce tends, under the control of the general conditions of demand and supply; it does not govern price, but it focusses the causes which do govern price.” Explain what Marshall means. Does the doctrine differ from Mill’s on the same subject?
    Would Marshall’s conclusion be applicable to a manufactured commodity which is produced under the conditions usually indicated by cost-accountants’ data (a supply curve positively inclined)?
  6. Suppose a decrease in the demand for a commodity produced with much fixed capital: what consequences would you expect on the equilibrium of supply and demand, price, quasi-rent, cost. Consider both the short period and the long period effects.
  7. Wherein, if at all, is the conception of quasi-rent applicable to

“Capital sunk in the soil”;
Pullman, Saltaire, and the like cases;
The gains of pioneers settling in a new country.

  1. What is meant by a law of increasing return? Do you believe there is one as regards “external economies”? internal economies?

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Year-end Final Exam
1925-26

Arrange your answers in the order of the questions

  1. Define, with the utmost brevity consistent with accuracy, producers’ surplus; consumers’ surplus; savers’ surplus. What writers do you associate with the concepts to which these terms refer?
  2. “When the artisan or professional man has once obtained the skill required for his work, a part of his earnings are for the future really a quasi-rent of the capital and labour invested in fitting him for his work, in obtaining his start in life, his business connections, and generally his opportunity for turning his faculties to good account; and only the remainder of his income is true earnings of effort. But this remainder is generally a large part of the whole. And here lies the contrast. For when a similar analysis is made of the profits of the business man, the proportions are found to be different: in his case the greater part is quasi-rent.”Is the greater part of the earnings of business men to be regarded as quasi-rent? Is only the remainder to be regarded as true earnings of effort? Are these propositions in accord with Walker’s doctrine concerning business profits?
  3. What sort of surplus, if any, arises from the operation of diminishing returns as regards (a) increasing output secured from land; (b) increasing output secured with the aid of additional instruments made by man?
  4. The resemblance or difference between Clark’s doctrine that “abstinence is confined to the genesis of new capital,” and the reasoning of later writers concerning the significance of the surplus accounts of corporations.
  5. “‘On the whole,’ says Marshall, ‘it happens that by far the greater number of the events with which economics deals affect in about equal proportions all the different classes of society; so that if the money measures of the happiness caused by two events are equal, there is not in general any very great difference between the amounts of the happiness in the two cases.’ This has been justly characterized as a cavalier dismissal of the effect of differences of wealth and differences in sensibility.”Why a cavalier dismissal? or why not? Consider whether the criticism holds good as regards Marshall’s reasoning on the effects of taxes and bounties.
  6. (a) “As the inquiry to which I wish to draw the reader’s attention relates to the effect of the variations in the relative value of commodities, and not in their absolute value, it will be of little importance to examine into the comparative degree of estimation in which the different kinds of human labour are held. We may fairly conclude that whatever inequality there might originally have been in them, whatever the ingenuity, skill, or time necessary for the acquirement of one species of manual dexterity more than another, it continues nearly the same from one generation to another; or at least that the variation is very inconsiderable from year to year, and therefore can have little effect, for short periods, on the relative value of commodities.”
    Is this a cavalier dismissal of the relation between differing rates of wages and the value of goods?(b) “Although general wages, whether high or low, do not affect values, yet if wages are higher in one employment than another, or if they rise and fall permanently in one employment without doing so in others, these inequalities do really operate upon values. . . . When the wages of an employment permanently exceed the average rate, the value of the thing produced will, in the same degree, exceed the standard determined by mere quantity of labour. Things, for example, which are made by skilled labour, exchange for the produce of a much greater quantity of unskilled labour; for no reason but because the labour is more highly paid.” Mill.What would Marshall say to this? Böhm-Bawerk? What is your own view?
  7. Is there essential difference between the doctrine that the general level of wages is determined by the discounted marginal product of labor, and Clark’s doctrine concerning the relation between wages and the product of labor?
  8. “It is not true that the spinning of yarn in a factory, after allowance has been made for the wear-and-tear of the machinery, is the product of the labour of the operatives. It is the product of their labour, together with that of the employer and subordinate managers, and of the capital employed; and that capital itself is the product of labour and waiting: and therefore the spinning is the product of labour of many kinds, and of waiting. If we admit that it is the product of labour alone, and not of labour and waiting, we can no doubt be compelled by inexorable logic to admit that there is no justification for Interest, the reward of waiting; for the conclusion is implied in the premiss.”(a) What would Böhm-Bawerk say to this? What is your own view?
    (b) What is the premiss which is implied in the conclusion?

____________________________________

1926-27

 

Course Enrollment: Economics 11
1926-27

[Economics] 11. Professor Taussig.—Economic Theory

Total 44: 38 Graduates, 3 Graduate Business, 2 Seniors, 1 Radcliffe.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1926-27, p. 75.

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Mid-year Examination
1926-27

[Arrange your questions in the order of the answers]

  1. The merits and defects of Walker’s treatment of distribution.
  2. The merits and defects of Ricardo’s treatment of value.
  3. The merits and defects of Mill’s treatment of profits.
  4. What is meant by “increase of demand” in the following passages: —
    (a) “The democratization of society and the aping of the ways of the well-to-do by the lower classes have greatly increased the demand for silk fabrics.”
    (b) “ The lower price of sugar after 1890, when sugar was admitted free of duty, at once caused an increase of demand.”
    (c) “The cheapening of a commodity may mean an increase of demand such that the total sum spent on it will be as great as before, even greater than before.”
  5. Describe the supply curves indicated by accountants’ figures for the costs of agricultural and of manufactured products; and explain wherein they confirm or fail to confirm traditional “laws of value” applicable to the two classes of goods.
  6. (a) “Were it not for this tendency [to diminishing returns] every farmer could save nearly the whole of his rent by giving up all but a small piece of his land, and bestowing all his labor and capital on that. If all the labor and capital which he would in that case apply to it gave as good a return in proportion as that he now applies to it, he would get from that plot as large a produce as he now gets from his whole farm; and he would make a net gain of all his rent save that of the little plot that he retained.”
    (b) “The return to additional labour and capital [applied to land] diminishes sooner or later; the return is here measured by the quantity of the produce, not by its value.”
    (c) “Ricardo, and the economists of his time generally were too hasty in deducing this inference [tendency to increased pressure] from the law of diminishing return; and they did not allow enough for the increase of strength that comes from organization. But in fact every farmer is aided by the presence of neighbours, whether agriculturists or townspeople. . . . If the neighbouring market town expands into a large industrial centre, all his produce is worth more; some things which he used to throw away fetch a good price. He finds new openings in dairy farming and market gardening, and with a larger range of produce he makes use of rotations that keep his land always active without denuding it of any one of the elements that are necessary for its fertility.”
    Have you any criticisms or qualifications to suggest on these passages from Marshall?
  7. “For periods which are long in comparison with the time needed to make improvements of any kind, and bring them into full operation, the net incomes derived from them are but the price required to be paid for the efforts and sacrifices of those who make them; the expenses of making them thus directly enter into marginal expenses of production, and take a direct part in governing long-period supply price. But in short periods, that is, in periods short relatively to the time required to make and bring into full bearing improvements of the class in question, no such direct influence on supply price is exercised by the necessity that such improvements should in the long run yield net incomes sufficient to give normal profits on their cost. And therefore when we are dealing with such periods, these incomes may be regarded as quasi-rents which depend on the price of the produce.”
    Precisely what is meant by “these incomes”?

 

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Year-end Final Examination
1926-27

Arrange your answers in the order of the questions

  1. What is the difference, if any, between

supply prices and expenses of production;
successive costs and contemporaneous costs;
demand curves and utility curves?

  1. Would you reckon economic rent among the expenses of production of a commodity? business profits?
    Would you reckon them among the costs of production?
  2. “‘Rent is not an element in price’ — such is the classical statement on the subject. . . . But if one defines rent as product imputable to a concrete agent, the impossibility of maintaining such a claim becomes apparent. Even if one were to restrict the term rent to the product created by land, the claim that it is not an element in adjusting market values would be absurd; for it would amount to saying that a certain part of the output of every kind of goods has no effect on their market value. The ‘price’ referred to in the formula is, of course, the market value expressed in units of currency.” What do you say?
  3. “That capital is productive has often been questioned, but no one would deny that tools and other materials of production are useful; yet these two propositions mean exactly the same when correctly understood. Capital consists primarily of tools and other materials of production, and such things are useful only in so far as they add something to the product of the community. Find out how much can be produced without any particular tool or machine, and then how much can be produced with it, and in the difference you have the measure of its productiveness.”
    What would Böhm-Bawerk say to this? J. B. Clark? What is your own view?
  4. Böhm-Bawerk remarks that the theory which he has put forward bears “a certain resemblance” to the wages fund theory of the older English School, but differs from it in various ways, one of which is “the most important.” What are the points of resemblance? and what is this “most important” difference?

Questions 6 and 7 may be treated as one, if you prefer; and questions 8 and 9 may also be so treated.

  1. “It may well be asked whether a method [of measuring utility] that needs so much guarding and explaining is worth adopting at all. The answer is that the principle of the declining marginal significance is fundamental. The doctrine of surplus value in the thing bought, over and above the value of the price paid, is an inevitable deduction from it.” Do you agree?
  2. Adventitious utility, conspicuous waste, consumer’s surplus, organic welfare. How are these related? or not related?
  3. Ricardo’s theory of cost of production is so expressed as almost to invite misunderstanding. In consequence there is a widely spread belief that it has needed to be reconstructed by the present generation of economists. . . . On the contrary the foundations of the theory as they were left by Ricardo remain intact; much has been added to them and very much has been built upon them, but little has been taken from them. He knew that demand played an essential part in governing value, but he regarded its action as less obscure than that of cost of production, and therefore passed it lightly over in the notes which he made for the use of his friends, and himself; for he never essayed to write a formal treatise: he regarded cost of production as dependent — not, as Marx asserted him to have done, on the mere quantity of labor used up in production, but — on the quality as well as quantity of that labor; together with the amount of stored up capital needed to aid labor, and the length of time during which such aid was invoked.” Do you agree?
  4. “The incomes which are being earned by all agents of production, human as well as material, and those which appear likely to be earned by them in the future, exercise a ceaseless influence on those persons by whose action the future supplies of these agents are determined. There is a constant tendency towards a position of normal equilibrium, in which the supply of each of these agents shall stand in such a relation to the demand for its services, as to give to those who have provided the supply a sufficient reward for their efforts and sacrifices. If the economic conditions of the country remained stationary sufficiently long, this tendency would realize itself in such an adjustment of supply to demand, that both machines and human beings would earn generally an amount that corresponded fairly with their cost of rearing and training, conventional necessaries as well as those things which are strictly necessary being reckoned for.”
    Is this in accord with Ricardo’s view? with Mill’s view? with Cairnes’s? What is your own opinion?

____________________________________

1927-28

Course Enrollment: Economics 11
1927-28

[Economics] 11. Professor Taussig.—Economic Theory

Total 56: 43 Graduates, 2 Graduate Business, 6 Seniors, 1 Junior, 4 Radcliffe.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1927-28, p. 75.

 

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Mid-year Final Examination
1927-28

Arrange your answers strictly in the order of the questions

  1. Wherein is there resemblance, wherein difference, between Walker’s long-run theory of wages and Cairnes’s?
  2. “Ricardo’s theory of cost of production is so expressed as almost to invite misunderstanding. In consequence there is a widely spread belief that it has needed to be reconstructed by the present generation of economists….On the contrary the foundations of the theory as they were left by Ricardo remain intact; much has been added to them and very much has been built upon them, but little has been taken from them. He knew that demand played an essential part in governing value, but he regarded its action as less obscure than that of cost of production, and therefore passed it lightly over in the notes which he made for the use of his friends, and himself; for he never essayed to write a formal treatise: he regarded cost of production as dependent—not, as Marx asserted him to have done, on the mere quantity of labor used up in production, but—on the quality as well as quantity of that labor; together with the amount of stored up capital needed to aid labor, and the length of time during which such aid was invoked.”
    Do you agree?
  3. What is the short period view, what the long period view (1) of Mill as regards the level of wages; (2) of Marshall as regards differences of wages in different occupations?
  4. Does Marshall conclude that money costs of production measure real costs of production? that value is ultimately determined by a constant supply price?
  5. “An increase in the aggregate volume of production will generally increase the size, and therefore the internal economies possessed by a representative firm; it will always increase the external economies to which the firm has access; and then will enable it to manufacture at a less proportionate cost of labour and sacrifice than before.”
    Why? or why not?
  6. Explain the criticisms or objections to the notion of consumer’s surplus which have been urged on the ground of (a) inequalities of income, (b) “esteem value” or “adventitious value,” (c) identity in the yield of satisfaction from each constituent of a given stock. Which among these objections if any, tell strongly against Marshall’s suggestion regarding the use of taxes and bounties?
  7. “The extra income derived from rare natural abilities bears a closer analogy to the surplus produce from the holding of a settler who has made an exceptionally lucky selection, than to the rent of land in an old country.”
    Why? or why not?
  8. (a) “The deepest and most important line of cleavage in economic theory” is “the distinction between the quasi-rents which do not, and the profits which do, directly enter into the normal supply prices of produce for periods of moderate length.” Marshall.
    (b) A critic has remarked: “In that which is most characteristic, original and positive in his work, Professor Marshall has left the old concept of rent far behind. The logical consequence of his treatment is that all the division fences between the different sorts of material wealth have been leveled; and that rent is the income of an material agent….”
    What have you to say?

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Year-end Final Examination
1927-28

 

  1. Explain in the briefest terms

Expenses of Production.
Opportunity Cost.
“Cost” as used by Cairnes.
“Cost” as used by Marshall.
“Cost” as used by Böhm-Bawerk.

  1. What do you conceive to be meant by “pure profits”? and what is the place of pure profits in the theory of cost and value?
  2. “‘Rent is not an element in price’ — such is the classical statement on the subject. It even expresses a view that is now prevalent. The expression itself however, is vague. It seems to mean that the fact of rent plays no part in the adjustment of values, and that things would exchange for one another in exactly the ratios in which they now do, if there were no such thing as rent. But if one defines rent as product imputable to a concrete agent, the impossibility of maintaining such a claim becomes apparent. Even if one were to restrict the term rent to the product created by land, the claim that it is not an element in adjusting market values would be absurd; for it would amount to saying that a certain part of the output of every kind of goods has no effect on their market value. The ‘price’ referred to in the formula is, of course, the market value expressed in units of currency.”
    What do you say?
  3. Resemblances and differences between the “discounted marginal product” theory of wages and the specific product theory.
  4. “Interest under Socialism” as discussed by Böhm-Bawerk.
  5. What are “fair wages,” in Marshall’s view? Clark’s? Böhm-Bawerk’s? Your own?

____________________________________

1928-29

Course Enrollment: Economics 11
1928-29

 

[Economics] 11. Professor Taussig.—Economic Theory

Total 39: 28 Graduates, 1 Graduate Business, 1 Senior, 1 Junior, 8 Radcliffe.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1928-29, p. 72.

 

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Mid-year Final Examination
1928-29

Answer the questions in the order in which they are put; and answer them all, distributing your time accordingly.

  1. It had been maintained by Adam Smith and others that:
    (1) profits are lowered by the mutual competition of merchants;
    (2) taxes on necessaries cause money wages to rise;
    (3) a rise in money wages means a rise in all prices;
    (4) taxes on wages lessen farmer’s profits, and thus lower rent.
    What would Ricardo say under each head?
  2. It has been said by German writers that there is a certain degree of truth in the wages fund doctrine, in that the capital of employers is the immediate source from which wages come; but the ultimate source is in the incomes of consumers. What would Ricardo say to this? Walker? your own view?
  3. In the familiar diagram representing conditions of increasing costs for an agricultural commodity, does the supply curve indicate expenses of production or “real costs” of production?
    In a similar diagram for a manufactured commodity, based on accountants’ figures of costs, does the supply curve indicate expenses or “real costs”?
    Are the two curves different in meaning, or do they indicate essentially the same situation?
  4. “We have next to study the conditions of business management; and in so doing we must have in view a problem that will occupy our attention as we go on. It arises from the fact that, though in manufacturing at least every individual business, so long as it is well managed, tends to become stronger the larger it has grown; and though prima facie we might therefore expect to see large firms driving their smaller rivals completely out of many branches of industry, yet they do not in fact do so.”
    What is Marshall’s solution of the problem thus stated by him?
  5. “That part of a man’s income which he owes to the possession of extraordinary natural abilities is a free boon to him; and from an abstract point of view bears some resemblance to the rent of other free gifts of nature, such as the inherent properties in land. But in reference to normal prices, it is to be classed rather with the profits derived by free settlers from the cultivation of new land, or again with the find of the pearl-fisher.”
    On what grounds does Marshall rest this conclusion? What would Walker say to it?
  6. How, if at all, did Mill modify Adam Smith’s conclusions on the causes of the differences of wages in different employments? Cairnes modify Mill’s? Marshall modify Cairnes’s?
  7. “It might be supposed at first thought that . . . the area above the horizontal line (in the usual diagram) represents consumers’ surplus. This is not exactly true, however, and that for two reasons. In the first place, the satisfaction of additional wants which a lower price makes possible may make the more important wants less intense. A man might be willing to give ten dollars for a cord of wood in order that at least one room in his house could be heated during the winter. He might also be willing to give seven dollars a cord for two cords, so as to heat two rooms, but the heating of the second room might render the heating of the first room less important to him. He might not be willing, for example, to give ten dollars plus seven dollars in order to have the two rooms heated. In the second place, utility itself is to a large extent affected by price. So far as our purchases satisfy what has been called the desire for distinction, or represent what Thorstein Veblen has termed ‘conspicuous consumption,’ a lowering of the price of a commodity would lessen its utility to us.”
    Give your opinion on these objections; and consider which of them, if either, would necessarily tell against Marshall’s suggestion concerning bounties and taxes.

 

HARVARD UNIVERSITY
ECONOMICS 11
Year-end Final Examination
1928-29

 

Arrange your answers in the order of the questions.
Two questions may be omitted.

  1. Resemblances and differences between Ricardo and Boehm-Bawerk.
  2. The following have been suggested, by one writer or another, as the grounds on which the distinction between interest and rent turns:
    (1) Land is fixed in amount, instruments made by man are not.
    (2) Competition equalizes the return on instruments made by man but not that on land.
    (3) The returns on land and instruments alike depend on marginal productivity.
    Examine critically but briefly each statement; and give your own view.
  3. Would interest necessarily persist in a socialist state? The rent of land?
  4. “Quasi-rents are the net profits made in years of exceptionally good trade, or by business men of exceptional natural ability.”
    “Business profits are the net return secured in years of exceptionally good trade, or by business men of exceptional natural ability.”
    Do you agree in either case?
  5. (a) “The output of the least efficient producers forms part of the total output whose magnitude helps to determine price. But to argue from this that there is some special relation between price and the costs of the least efficient producers is a complete non sequitur.”
    (b) “‘ Rent is not an element in price’ — such is the classical statement on the subject. It even expresses a view that is now prevalent. The expression itself, however, is vague. It seems to mean that the fact of rent plays no part in the adjustment of values, and that things would exchange for one another in exactly the ratios in which they now do, if there were no such thing as rent. But if one defines rent as product imputable to a concrete agent, the impossibility of maintaining such a claim becomes apparent. Even if one were to restrict the term rent to the product created by land, the claim that it is not an element in adjusting market values would be absurd; for it would amount to saying that a certain part of the output of every kind of goods has no effect on their market value. The ‘price’ referred to in the formula is, of course, the market value expressed in units of currency.”
    What is your opinion?
  6. Are there important distinctions between these propositions:
    (a) Wages are determined by the specific product of labor;
    (b) Wages are determined by the imputed product of labor;
    (c) Wages are determined by the discounted marginal product of labor.
  7. “It is evident that, if the supply [of labor] is increased, whether the increase comes about through an addition to the number of workpeople or through an addition to their average capacity, the national dividend must be increased. Our problem is to ascertain the effect that will be produced upon the aggregate real income of labour. The analysis set out in the preceding section shows that the marginal net product of labour, in terms of things in general, and, therefore, its real earnings per unit, must be diminished. Whether its aggregate earnings will be increased depends, therefore, on whether the elasticity of the demand for labour in general is greater or less than unity. If this elasticity is greater than unity, labour in the aggregate will receive a larger absolute quantity of dividend than before; whereas, if the elasticity is less than unity, it will receive a smaller absolute quantity. It is, therefore, necessary to determine whether in fact the elasticity of demand is greater or less than unity.” Do you agree? and what is your conclusion on the elasticity of demand for labor?
  8. Compare Hobson’s analysis of “costless” savings with that of other recent writers.

____________________________________

1929-30

Course Enrollment: Economics 11
1929-30

[Economics] 11. Professor Taussig.—Economic Theory

Total 53: 44 Graduates, 3 Seniors, 5 Radcliffe, 1 Other.

 

Source: Harvard University. Reports of the President and Treasurer of Harvard College, 1929-30, p. 78.

 

 

 

HARVARD UNIVERSITY
ECONOMICS 11
Mid-year Final Examination
1929-30

Arrange your answers in the order of the questions. Answer ALL the questions.

  1. “The ordinary bargain between labour and capital is that the wage-receiver gets command over commodities in a form ready for immediate consumption, and in exchange carries his employer’s goods a stage further towards being ready for immediate consumption. But while this is true of most employees, it is not true for those who finish the process of production. For instance, those who put together and finish watches, give to their employers far more commodities in a form ready for immediate consumption, than they obtain as wages. And if we take one season of the year with another, so as to allow for seed and harvest time, we find that workmen as a whole hand over to their employers more finished commodities than they receive as wages.”
    What do you say to this? and what is its bearing on the questions raised by George and Walker?
  2. “This principle of the division of the produce of labour and capital between wages and profits, which I have attempted to establish, appears to me so certain, that excepting in the immediate effects, I should think it of little importance whether the profits of stock or the wages of labour, were taxed. . . . A tax on wages does not fall on the landlord, but it falls on the profits of stock: it does not ‘entitle and oblige the master manufacturer to charge it with a profit on the prices of his goods,’ for he will be unable to increase their price, and therefore he must himself wholly and without compensation pay such a tax.”
    What led Ricardo to the conclusions stated in this passage?
  3. (a) “As the inquiry to which I wish to draw the reader’s attention relates to the effect of the variations in the relative value of commodities, and not in their absolute value, it will be of little importance to examine into the comparative degree of estimation in which the different kinds of human labour are held. We may fairly conclude that whatever inequality there might originally have been in them, whatever the ingenuity, skill, or time necessary for the acquirement of one species of manual dexterity more than another, it continues nearly the same from one generation to another; or at least that the variation is very inconsiderable from year to year, and therefore can have little effect, for short periods, on the relative value of commodities.”
    (b) “Although general wages, whether high or low, do not affect values, yet if wages are higher in one employment than another, or if they rise and fall permanently in one employment without doing so in others, these inequalities do really operate upon values. . . . When the wages of an employment permanently exceed the average rate, the value of the thing produced will, in the same degree, exceed the standard determined by mere quantity of labour. Things, for example, which are made by skilled labour, exchange for the produce of a much greater quantity of unskilled labour; for no reason but because the labour is more highly paid.” Mill.
    What would Cairnes say about the proposition here laid down? What would Marshall say? What are your own opinions?
  4. Consider whether marginal cost determines price, or price determines marginal cost, in the following cases:
    (a) the short-period price of a manufactured commodity;
    (b) the short-period (seasonal) price of an agricultural commodity;
    (c) the long-period price of a manufactured commodity;
    (d) the long-period price of an agricultural commodity;
    (e) the long-period value of gold.
  5. Describe the supply curves (particular costs curves) which we have for agricultural products; indicate what they signify; and indicate also in what principles and in what manner such curves should be constructed in order to make them fit into the “orthodox” reasoning about the rent of land, or to serve as test or verification for that reasoning.
  6. (a) “The deepest and most important line of cleavage in economic theory” is “the distinction between the quasi-rents which do not, and the profits which do, directly enter into the normal supply prices of produce for periods of moderate length.”
    (b) A critic has remarked: “In that which is most characteristic, original and positive in his work, Professor Marshall has left the old concept of rent far behind. The logical consequence of his treatment is that all the division fences between the different sorts of material wealth have been levelled; and that rent is the income of any material agent. . . .”
    Why should Marshall consider the line of cleavage explained in (a) to be the most important? If he does, must he admit the “logical consequence” stated in (b)?
  7. “Curves of total satisfaction are purely abstract; that is to say, they represent the subjective value attached by a consumer to each increment of the commodity, or the amount he would purchase at any given price, apart from any consideration of the causes that might be supposed in actual experience to limit his supply or raise the price of the commodity, and apart from all reactions upon the price or other commodities. They are also isolated; that is to say, we cannot conceive of a system of such curves being so constructed as to be valid simultaneously. Nor can we sum their areas, taken successively, without omitting some values and counting others more than once. Nor can we read on them the effect of a rise or fall in the consumer’s income. Nevertheless their general form has a high theoretical significance. . . .
    It may well be asked whether a method that needs so much guarding and explaining is worth adopting at all. The answer is that the principle of declining marginal significances is absolutely fundamental. The doctrine of surplus value in the thing bought over and above the value of the price paid, is an inevitable deduction from it.”Explain, and give your own views.

 

HARVARD UNIVERSITY
ECONOMICS 11
[Year-end Final Examination]
1929-30

Arrange your answers in the order of the questions.

  1. Explain briefly,

Simple Competition
Monopolistic Competition
Bilateral Monopoly
Simple Monopoly
Discriminating Monopoly

  1. What is the elasticity of demand for labor, on the reasoning of the Wages Fund doctrine? on that of Böhm-Bawerk? on that of Pigou? What is your own view?
  2. What are “pure profits”? and what would be “impure” profits? Can you distinguish? If so, how and why?
  3. “That able but wrongheaded man, David Ricardo, shunted the car of Economic Science on to a wrong line, on which it was further urged toward confusion by his equally able and wrongheaded admirer John Stuart Mill.”
    “Ricardo’s theory of cost of production is so expressed as almost to invite misunderstanding. In consequence, there is a widely spread belief that it has needed to be reconstructed by the present generation of economists. . . . On the contrary the foundations of the theory as they were left by Ricardo remain intact; much has been added to them and very much has been built upon them, but little has been taken from them.” Marshall.
    What ground for either view?
  4. Give the rest of your time — at least one hour — to a discussion of The Universal Law of Diminishing Returns.

 

 

Source for examination questions: Harvard University Archives. Prof. F. W. Taussig, Examination Papers in Economics 1882-1935 (Scrapbook).

Image Source:  Harvard Class Album, 1934.