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Chicago Exam Questions Theory

Chicago. Graduate preliminary examination in economic theory, incomplete. Winter, 1956

 

Artifacts displayed in museums, especially ancient artifacts, are perhaps more often as not, flawed. So too with the documentary record. Sometimes we have gaps. Rather than mourn the missing documents, we celebrate what we have gotten our hands and eyes on. And so this post gives us the True-False-Uncertains questions of the winter quarter 1956 economic theory prelim exam from the department of economics at the University of Chicago.

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Links to previously posted Chicago prelim exams.

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ECONOMIC THEORY
Preliminary Examination
Winter Quarter 1956
(incomplete)

Write your number, and not your name, on your examination paper.
Answer all questions.
Time: 4 hours.

  1. (40 points) True, False or Uncertain. Explain your answer.
    1. Since the costs of finding oil are virtually constant over the relevant range of exploration now going on, the depletion allowance which amounts to a subsidy to companies which extract the oil they find is purely a device which increases the profits of the oil companies at the expense of the taxpayer.
    2. A minimum wage law may reduce the demand for labor by some firms and may have no effect on the demand by other firms, but will never increase it.
    3. The sum of the income elasticities of demand for all commodities (by a single consumer) is unity, while the sum of their price elasticities is zero.
    4. If the marginal utility of each commodity diminishes with increases in the rate of consumption, then no commodity will be an inferior commodity.
    5. The fact that new commodities are typically introduced into a consumer’s budget when his income rises implies that the marginal utility of the commodities he was already consuming must have been falling.
    6. Although the demand schedule for a productive service by a firm buying competitively must have a negative slope, the demand schedule for a productive service by a monopsonistic firm may have either a positive or negative slope.
    7. The futures price of a commodity equals the current spot price plus the cost of storing the commodity for the length of the futures contract.
    8. The existence of effective rent control on old dwellings decreases the demand for new dwellings.
    9. Family size has declined in the United States from 1900 to 1950; yet per capita income has increased. If there were no change in tastes, this would imply that children are an inferior commodity.
    10. The existence of firms of different sizes in the same industry implies that there is a horizontal marginal cost curve for firms in the industry.
    11. Immigration to the United States of a million unskilled laborers from abroad would increase the average per capita income of everyone previously living in the United States.
    12. The fact that managers of many large corporations in the United States own a small fraction of the common stock of these corporations implies that the policies of these corporations are often not in the best interests of the stockholders.
    13. The figures for national income show that during the 20th century, per capita national income has grown at a faster rate in the United States than in India. This implies that Indians have been saving a smaller fraction of their incomes.
    14. If we replaced the income tax in the United States by a sales tax, the change would induce persons to shift away from occupations that have large nonpecuniary advantages.
    15. The competitive firm attempts to equalize marginal cost, average cost and price.
    16. When a firm’s average cost is decreasing, its marginal cost is decreasing and is less than average cost.
    17. Between 1951, and 1956 farm product prices (relative to prices paid by farmers) fell by about 20 percent; farm output increased by about 9 percent. This implies that the supply function for farm products is backward bending.
    18. If all firms paid each factor the value of its marginal product and if all product prices were equal to their respective marginal costs, it would not be possible to increase the output of one product without decreasing the output of some other product.
    19. Two products are produced in fixed proportions. An increase in the demand for one of the products would result in a fall in the price of the other product and, all other things constant, the fall in the price of the second product will be the greater, the greater the relative importance of the second product in the total receipts derived from producing the two joint products.
    20. The existence of overtime pay at premium rates proves that the supply of labor is backward bending.

Source: Harvard University Archives. Papers of Zvi Griliches. Box 129. Folder “Preliminary Examinations, 1955-1957”.

Image Source: Coat of arms of the University of Chicago.

The University Coat of Arms, a shield displaying the phoenix below and the book and motto above, was adopted by the Board of Trustees on August 16, 1910. The University motto Crescat scientia; vita excolatur was adopted by the Board on January 17, 1911 and added to the Coat of Arms on the pages of the open book.
The Coat of Arms was designed by Pierre de Chaignon la Rose, a heraldic specialist in Boston working under contract to the Board of Trustees. No surviving documents make clear precisely why the phoenix was adopted as the central element on the Coat of Arms, but the most probable assumption is that the phoenix can be seen as a symbol of the city of Chicago, which was seriously damaged by the great Chicago Fire of 1871 and then was successfully rebuilt, or reborn, within just a few years.

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Preliminary and Field Exams from the economics graduate program of the University of Chicago

Note: The chronological ordering of quarters at the University of Chicago during a calendar year goes Winter, Spring, Summer, Autumn. For this reason the following is arranged chronologically.

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