DEPARTMENT OF ECONOMICS
SAN JOSE STATE UNIVERSITY
MASTER’S COMPREHENSIVE EXAMINATION
DECEMBER 4, 2015
6:00 P.M. TO 9:30 P.M.
PROCTOR: HUMMEL & LIU
INSTRUCTIONS:
1.
Answer ONLY the specified number of questions from the options provided in each
section. Do not answer more than the required number of questions. Each section takes
one hour.
2.
Your answers must be on the paper provided. No more than one answer per page. Do not
answer two questions on the same sheet of paper.
3.
If you use more than one sheet of paper for a question, write “Page 1 of 2” and
“Page 2 of 2.”
4.
Write ONLY on one side of each sheet. Use only pen. Answers in pencil will be
disqualified.
5.
Write ------ END ----- at the end of each answer.
6.
Write your exam identification number in the upper right-hand corner of each sheet of
paper.
7.
Write the question number in the upper right-hand corner of each sheet of paper.
Section 3: Applied Economics—Answer Any Two Questions.
3A. (Econ 212: Haight) The Harrod-Domar model is a widely used model in the economic
development community.
a. What are the strengths of this model?
b. What are its shortcomings?
c. How does the model differ from that of Robert Solow?
3B. (Econ 221: Holian) Consider a Cournot duopoly problem, where market demand is given by
Q = 100 – P, where Q is the sum of both producers’ output (i.e. q1 + q2 = Q), P is the market
price, firm 1 has total costs given by TC1 =10 + q1, and firm 2 has total costs given by TC2 = 2 +
2q2. Answer the following three questions. Under the Cournot assumptions:
a. How much will each firm produce in equilibrium.
b. What will be the equilibrium price.
c. How much profit will each firm make?
(over)
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DEPARTMENT OF ECONOMICS
SAN JOSE STATE UNIVERSITY
MASTER’S COMPREHENSIVE EXAMINATION
DECEMBER 4, 2015
6:00 P.M. TO 9:30 P.M.
PROCTOR: HUMMEL & LIU
3C. (Econ 205A: Holian) Econometric models estimated using observational data are often
biased. Two types of bias are particularly common: omitted variables bias (OVB) and
simultaneous causality bias (SCB). For both of these types of bias, illustrate the problem by
writing down a regression equation, describing the dependent and independent variables, and
explaining which of the coefficient estimates is biased and why. Then, describe two econometric
techniques that can be used to ameliorate OVB and SCB in your examples. (So, if you begin with
OVB, write and explain an equation illustrating OVB and then discuss two possible solutions to
OVB, and then write and explain a separate equation illustrating SCB, and then discuss two
solutions to SCB.)
3D. (Econ 200: Foldvary) Regulation; answer (a), (b), and (c):
a. Explain how to best measure the economic effects of regulation.
b. Explain regulatory capture. Analyze ways to prevent it.
c. Explain how regulations can be a substitute for taxation.
3E. (Econ 232: Foldvary) Describe and explain the most important implicit subsidies provided
by governments. Analyze their impact on economies, how such subsidies could be eliminated,
and the economic effects of avoiding these subsidies.
3F. (Econ 113A: Hummel) Discuss the pricing of slaves in the pre-Civil War American South.
What determined a slave’s price, and what factors caused it to vary, both among different slaves
and over a slave’s life? Show how slave pricing relates to the pricing of land and of modern
financial assets, and explain why this ensured that slaveholders on average earned market rates of
return. How did the bearing of slave children and the threat of running away affect the price of
slaves? Under what circumstances would manumission through self-purchase be lucrative for
slaveholders?
3G. (Econ 166: Pogodzinski) Answer any two of the following questions:
a. Why do some people rent housing while others own housing?
b. Compare the degree to which individual utility is increased vs. slums reduced for the
following housing subsidy programs: IG, HV, PRS, and PH.
c. Is having congestion-free highways socially optimal? Explain your answer.
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