Chicago Economics. Ph.D. Exam. Spring 1939

University of Chicago written examination questions. Part I: Economic Theory. Part II: Monetary and Cycle Theory.

 

ECONOMIC THEORY
Written Examination for the Ph.D. Degree

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Spring Quarter, 1939

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PART I

Time: 4 hours

Answer three questions in Group I and three questions in Group II—six questions in all.

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Group I

1. A competitive industry uses large enough fractions of the available stocks of several important types of productive services appreciably to influence the prices of these services by its own demand for them. Discuss: (a) the probable shape of the long-run supply curve of that industry’s product, and (b) the relationships between (1) that product’s long-run equilibrium price and (2) the long-run average and marginal costs for a particular concern in that industry and also for the industry as a whole.
2. An industry produces a bulky standardized commodity, e.g., cement, and uses the base-point pricing system. Mill No. 1 is located at a base point which is one hundred miles away from the nearest mill, No. 2, and two hundred miles away from the next mill, No. 3, the three mills being situated in a straight line as follows: 1__________2____________________3. From No. 1 to No. 2 and from No. 2 to No. 3 are separate freight zones, with 25 cents a barrel rates within each zone for any distance, and 50 cents a barrel for shipments from any point in one zone to any point in the next zone regardless of distance. Mill No. 2, however, gets the 25 cents rate for shipment into either zone. You are asked by Mill No. 1 for advice as to (a) how to determine its optimum base point price, and (b) how far it should invade the market territories of Mills Nos. 2 and 3 through freight absorption, maximum net revenue being its sole objective.
   (a) How would you proceed? (What additional information would you need? How would you use it?)
   (b) Do you know of any industries whose price structure is fairly illustrated by this example?
   (c) What objections might be raised against this type of price structure from a social point of view?
3. Suppose that frequency distributions of hourly money wage rates (a) in different crafts, (b) in different regions, in the United States were constructed for 1910 and for 1930 and that in each case the frequency distribution for 1930 showed a much greater concentration about the mean than the distribution for 1910.
   (a) Frame plausible hypotheses to explain such a trend.
   (b) Indicate in general lines how their validity might be tested.
4. In a closed economy, with a paper standard currency fixed in quantity, a 10 per cent sales tax levied upon all final sales to consumers of tangible commodities is the only tax. There is substituted for this tax a uniform 15 per cent personal income tax, which produces and identical amount of revenue. Discuss the changes in the price structure which would probably result from the change in the method of taxation.

 

Group II

1. Discuss the pros and cons of (a) general, and (b) selective, wage-reductions as a means of procuring fuller employment at the present stage of the depression.
2. Distinguish between “loan-fund,” “cash-balance” (Keynesian), and marginal productivity theories of the determination of the interest rate structure, and discuss the possibility (or the need) of harmonizing them.
3. Discuss the differences and the resemblances between the objectives and the attitudes toward free economic enterprise of the seventeenth, eighteenth century mercantilists and the present-day advocates of comprehensive economic planning.
4. Compare the doctrines of the German historical school and the American institutionalists.

Source: Columbia University Archives, Albert Gailord Hart Collection, Box 61, Folder “Sec 2. General Exams Chicago (Micro)”

 

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PART II
MONETARY AND CYCLE THEORY

Written Examination for the Ph.D. Degree

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Spring Quarter, 1939

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Time: 2½ hours.

Answer all four questions.

1. Explain the doctrine of “forced saving,” and discuss its applicability to the period since 1933.
2. Discuss and appraise the various parts of the following quotation:
   “If the quantity theory of money is true, the demand for money is taken as perfectly elastic; because human wants are indefinitely extensible, the public’s demand for money is insatiable, and prices vary directly as the quantity of money offerable. When the Austrians began to apply the marginal analysis, this commodity money having unit elasticity—a perfectly flat horizontal demand curve—naturally attracted attention.”
3. There is a current belief among many economists that investment opportunities for the future will be so restricted as to necessitate continuous spending by governments. Indicate the factors that would have to be considered in deciding upon the merits of this contention and give your conclusion.
4. Formulate a set of rules in accordance with which you think the gold standard would operate with a considerable degree of acceptability today; or, if you do not believe this to be possible, indicate why. You may assume that a satisfactory redistribution of gold among the nations has been achieved.

Source: Columbia University Archives, Albert Gailord Hart papers, Box 61, Folder “Exams. Chicago.”

Image: University of Chicago Photographic Archive, apf2-07443, Special Collections Research Center, University of Chicago Library.