Econ 402 History of Economic Thought
Fall Semester 2015
Final Exam
Part I (10 points)
Name: ______________________
EASY
For each of the concepts or terms on the left, select the name of the person associated
with the concept or term from the right.
1. Duopoly
_____
A. Karl Marx
2. Partial equilibrium
_____
B. Milton Friedman
3. Marginal propensity to consume ___
C. Irving Fischer
4. Pleasure-pain principle
D. Leon Walras
_____
5. Permanent income hypothesis _____
E. Augustin Cournot
6. Imputation
_____
F. Alfred Marshall
7. Industrial reserve army
_____
G. Carl Menger
8. Price discrimination
_____
H. Jeremy Bentham
9. Quantity Theory of Money _____
I. John Maynard Keynes
10. Walras’ Law
J. Jules Dupuit
Part II (40 points)
Price,
cost
_____
SLIGHTLY LESS EASY
MC
ATC
P’
P
Output
1.
See the graph above. It shows the initial position of a representative firm in a
competitive industry where the market price is initially P. A shift in the demand for this
product raised the price to P’.
a. Show the output the firm will produce in the short-run, and show the area on the
graph that represents the firm’s short-run profits.
b. Explain what happens in the long run to the firm’s profits, and what happens in
the long-run to the market price.
c. Suppose that expansion of this industry leads to economies of scale which are
external to the firm but internal to the industry. Show what happens to the market
price and the profits of the representative firm in the long run. (You probably need
to construct a new graph, instead of drawing everything on top of the graph
above.)
d. Whose contribution to economic analysis are we using in this question?
2.
See the graph above. Suppose a city is located at point A, with flat agricultural
land surrounding the city in all directions. There are 2 crops that can be grown on the
land. The vertical distance on the graph represents the cost to grow and deliver to the
city’s central market $1 worth of potatoes, from a farm located at a distance from the city
center measured on the horizontal axis. The cost to deliver $1 of potatoes is shown on
lines CB and BD. The upward slope of CB and BD represents the transportation costs
which are proportional to the distance the potatoes need to be transported. Lines EF and
FG represent the cost to deliver $1 worth of wheat to the city’s central market.
a. Show on the graph the portion of the value of the crop that represents rent to the
owner of a piece of agricultural land located at point H.
b. Suppose that the technology for growing wheat improves, so that the cost of
growing $1 of wheat falls from F to J. What happens to the crop selection and the
rent on land located at K?
c. Suppose the cost of transporting potatoes falls, so that cost of delivering $1 worth
of potatoes becomes LB and BM. What happens to crop selection and rent on land
located at N?
d. Whose contribution to economic analysis are we using in this question?
Part III (20 points) MODERATE
Identify TWO of the following concepts, statements, or principles. Each answer
should consist of no more than 4 or 5 sentences, identifying or defining the
concept, identifying the thinker(s) you believe are most closely associated with the
concept, and the significance of the concept in the development of economic
theory. To receive full credit, each answer must contain the three elements:
(1) identification of concept,
(2) identification of the person(s) associated with it, and
(3) explanation of the significance of the concept.
No additional credit will be given for more than TWO answers! In such cases,
I will grade the first two answers and disregard the remainder.
Antinomy of value
thesis/antithesis/synthesis
Consumer surplus
ceteris paribus
reaction function
Part IV (30 points) STILL NOT THAT HARD
Select ONE of the following essay questions and give as complete an answer as
your knowledge (or time) allows.
1. Alfred Marshall wrote that his method of economic investigation involved
(for his own purposes) treating the problem with mathematical tools, but
then “burning the math” before presenting it to the general public.
Question: Why burn the math? What is gained from pretending that the
analysis is not rooted in mathematical reasoning? Which economic
thinkers agree with Marshall that the math should be kept in the
background, and which would disagree (and why?)
2.
Is economics a real science? If it is not, is it going to become one? Should
it be trying to become a science? What is to be gained if economics
becomes more “scientific” – and what would be lost? Which of the
thinkers we have discussed in the second half of the course would be in
favor or economics becoming more scientific – and which would be
opposed?