Wolfgang Stolper taught at Swarthmore College from 1941-1949. In his papers at Duke University’s Economists’ Papers Archive one finds copies of the following economic theory examination questions prepared by Swarthmore’s external examiners:
Jan/May 1942 (James G. Smith)
Jan 1943 (Paul Samuelson)
May 1943 (Paul Samuelson)
October 1943 (Lloyd Metzler) [transcribed below]
Feb 1944 (Joseph D. Coppock)
June 1944 (Friedrich Lutz)
Oct 1944 (Lloyd Metzler) [transcribed below]
Jun 1945 (Joseph D. Coppock)
Jun 1946 (Richard Musgrave)
Jan 1947 (Joseph D. Coppock)
Undated (Lloyd Metzler) [transcribed below]
The above list has led me to an interpolative guess of either February or October 1945 for the undated Metzler honors examination. Links are provided to the previously posted transcriptions of the examinations by Samuelson and Musgrave.
_________________________
Swarthmore College
Division of the Social Sciences
Department of Economics
October 20, 1943
Economic Theory
Honors Examination
Mr. Metzler
ANSWER ONE QUESTION FROM EACH PART
PART I
Write a one-hour essay on one of the following topics:
- The relation between cost curves and supply curves, and the conditions of equilibrium in a purely competitive industry, both in the long run and in the short run.
- A comparison of monopolistic competition and pure competition, including a contrast of the equilibrium position of the firm and the number of firms in the “industry” under monopolistic competition, with the equilibrium conditions and number of firms under pure competition.
- The marginal productivity theory in its original form, and the changes made necessary by the theory of monopolistic competition.
- Determinants of the level of employment and income.
- A careful analysis of the population problem in the United States, including both regional distribution problems and the problem of the size of the total population.
- Monetary versus “real” theories of the rate of interest.
Part II
- How was the cost controversy related to the development of the theory of monopolistic competition?
- A tax of $1 per unit is imposed upon the production of a certain commodity which is produced under conditions of pure competition. Assuming that the industry is initially in equilibrium, show how this tax affects he price, output, profits, and the number of firms in the industry, both in the short run and in the long run.
- Discuss the principles of price discrimination in a monopolized industry.
- Suppose there are only two firms producing a standardized product. Describe the determination of price and output in this industry, pointing out the difficulties which arise in such a case.
Part III
- Suppose a particular industry X produces its commodity with only two factors, labor and land, which may be used in variable proportions. An increased supply of this particular type of labor causes the wage rate to decline. Assuming no change in the demand for the product, analyze the effect of the wage reduction on (a) employment of labor, (b) employment of land, (c) price of the product, (d) output of the product, and (e) labor’s relative share in the total distribution.
- Describe Malthus’ theory of population. Can you present a more sophisticated version in the light of modern theories of production and distribution?
- “The rate of interest is the result of a race between accumulation and invention.” Discuss.
- Discuss the relation of the modern corporation to the theory of profits.
Part IV
- What types of cyclical fluctuation may be found in statistics of employment, income, production, and prices? How do you explain each type of cycle?
- What measures would you suggest for the control of employment after the war? Explain each carefully.
- In the period of the twenties, economists believed that business cycles could be controlled by monetary measures (i.e., movement of interest rates, bank reserve ratios, etc.). Account for the failure of such measures to control the depression of the thirties.
- Explain carefully the relation between investment and the level of employment, relating the analysis to Schumpeter’s “circular flow”.
Source: Duke University. David M. Rubinstein Rare Book and Manuscript Library. Economists’ Papers Archives. Wolfgang F. Stolper Papers, Box 22, Folder 1.
_________________________
Swarthmore College
Division of the Social Sciences
Department of Economics
October 16, 1944
Economic Theory
Honors Examination
Dr. Lloyd A. Metzler
Federal Reserve Board
Washington, D.C.
ANSWER FIVE QUESTIONS, INCLUDING AT LEAST ONE FROM EACH PART.
I
- “The conditions which determine the prices charged by a local clothing store are quite unlike those which govern the price of wheat or corn.” Explain carefully.
- After the war, expenditures of the federal government will be considerably higher than in the pre-war period. To meet part of these expenditures, two kinds of business taxes are proposed: (1) a tax on corporate profits, similar to our present tax, but with lower rates; (2) taxes on the sales of certain luxury items, such as cigarettes, tobacco, and liquor. It is sometimes said that the first type of tax falls upon the corporations themselves, whereas the second falls upon the consumers of the taxed items. Do you agree or disagree? Why or why not?
- “Imperfectly competitive markets involve an inevitable waste. Each firm produces less than its optimum output, and charges a higher price than might otherwise be necessary.” Evaluate this statement. If such wastes exist, how can they be eliminated?
- Suppose a particular industry produces a standardized product, such as steel, but there are only four or five producers in the whole industry. What determines the price of the product?
- Compare the effects of a tax on output in a perfectly competitive industry with those of a similar tax on a monopolistic output, both in the short run in the long run.
II
- “In a perfectly competitive industry, every worker gets just what he is worth, but in monopoly industries the workers are always exploited.” Present your own opinion on this subject.
- Define “elasticity of substitution” and explain type of problem in which the concept is useful.
- An industry in which there is only a single producer is unionized, and a standard wage is set which is higher than the prevailing wage. Analyze the effects of this action upon (a) the number of workers employed, (b) the output of the industry, (c) the price of the product, and (d) the total wage bill.
- Answer (3), assuming that the industry is perfectly competitive.
III
- One frequently encounters two statements about the return to land: (a) “Rent is the difference between the productivity of a given plot of land and the productivity of land which it is just worthwhile to cultivate.”(b) “Rents would exist even if all land were uniformly productive; it is a surplus which arises from the fact that additional units of labour applied to a given plot of land have diminishing productivity.” Are these two statements contradictory? Explain your answer.
- “The law of diminishing returns is indispensable to the existence of rent. Unless this law were true, the entire world’s supply of wheat could be grown in a flower pot.” Comment.
- “Rent, like the reward of any other factor of production, is determined by conditions of supply and demand. From this point of view, rent differs from wages mainly in respective conditions of supply.” Do you regard this is an important difference? Why or why not? Contrast the long-run effects of a tax on rents with the long-run effects of a tax on wages, assuming that wages initially are near the subsistence level.
- “The equilibrium rate of interest is the rate which makes the supply of savings equal to demand. The supply of savings is the schedule of amounts which individuals wish to save at various interest rates, while the demand is the schedule of amounts which business men wish to invest. Thus, when the rate of interest is in equilibrium, savings are equal to investment. But if the rate of interest exceeds the equilibrium rate, investment falls short of savings.” Evaluate this statement.
- Compare Böhm-Bawerk’s theory of interest with the monetary theory.
- “In the long run, profits of the competitive industry tend toward zero.” Does this mean that the accountant’s reports of the small enterprise owned by a single individual will also attend toward zero? Explain your answer.
IV
- Present a program for maintaining full employment in the United States after the war.
- “Since national income is equal to consumption plus net investment, and savings are simply the difference between income and consumption, it follows that savings for any given period are always equal to investment, by definition. For this reason, a business cycle theory which attributes changes in income and employment to a disparity between savings and investment must be fallacious.” Comment.
- Explain carefully how income is related to the level of net investment.
- During the first world war, a high interest rate was regarded as one of the important means of curbing inflation. In the present war, on the other hand, a conscious attempt has been made to keep interest rates at a very low level. Explain the relation between interest rates and prices in an economy where full employment prevails. Why do you suppose high interest rates were abandoned as an anti-inflation measure in the present war?
- It is sometimes said that unemployment exists because workers are unwilling to accept the wage which corresponds to their productivity. According to this view, if workers were willing to accept a reduction of wage rates, business men would find it profitable to hire more workers and unemployment would thereby be reduced. Do you agree or disagree? Explain your answer.
Source: Duke University. David M. Rubinstein Rare Book and Manuscript Library. Economists’ Papers Archives. Wolfgang F. Stolper Papers, Box 22, Folder 1.
_________________________
Swarthmore College
Division of the Social Sciences
Department of Economics
[No date–1945?]
ECONOMIC THEORY
Honors Examination
Dr. Lloyd A. Metzler
Washington, D.C.
ANSWER FOUR QUESTIONS, INCLUDING ONE FROM EACH PART.
I
Write an essay (about one hour) on one of the following topics:
- The theory of interest, from Böhm-Bawerk to Keynes.
- Monopolistic competition and the theory of distribution.
- The theory of discriminating monopoly.
- A comparison of perfect competition with monopolistic competition.
- Factors which determine the level of employment.
- The relation of wage rates to employment.
- The theory of the duopoly.
- The relation between wates [sic, “wage rates”?] and rent.
- The law of variable proportions and theory of distribution.
II
- As a result of a technological change, the cost of producing a particular commodity, X, is reduced for all firms. Assuming that the industry is perfectly competitive, the effects of this change upon output, price and profits in both the short run in the long run.
- Explain the relations between marginal costs, average costs, and supply curves in a perfectly-competitive industry.
- “In a perfectly-competitive industry, the tax on sales is always born by consumers, whereas in a monopoly industry, the monopolists bears a part of the added costs.” Evaluate this statement, considering both the short-run in the long-run.
- Explain the meaning of “excess capacity” in the theory of monopolistic competition, and show how it is related to other concepts of capacity.
III
- It is sometimes said that unions can improve the position of workers only to a very limited extent, since wages are governed by productivity, over which unions have little control. Evaluate this statement.
- Discuss the relations between inventions, wage rates, and the total wage bill.
- Contrast the theory of wages presented by Hicks with that of Ricardo.
- Show how Keynes’ monetary theory of interest evolved from Marshall’s “supply and demand” theory.
- Economic conditions in a particular country are disturbed by a rise in the propensity to consume. Explain the repercussions upon the rate of interest, assuming that the amount of money remains unchanged.
- Compare the theories of profit of Marshall and Schumpeter.
IV
- Describe the analytical problems which arise in attempting to measure business cycles.
- Show how the demand for producers’ goods is related to the demand for consumers’ goods, and explain the relevance of this relationship to business cycle theory.
- Present a brief description of the problem of unemployment which will face the United States at the close of the war, and suggest measures for solving this problem.
- Compare Schumpeter’s theory of business cycles with the theory of employment developed by Keynes.
Source: Duke University. David M. Rubinstein Rare Book and Manuscript Library. Economists’ Papers Archives. Wolfgang F. Stolper Papers, Box 22, Folder 1.
Image Source: “From family album, taken while Lloyd Metzler was a student at Harvard.”
“Lloyd A. Metzler” by Margiemetz – Own work. Licensed under CC BY-SA 3.0 via Commons.