Economics 321 Final

Prof. Bryan Caplan

Fall, 2015




·         You have 75 minutes to complete this exam. 

·         Write all answers directly on the exam.

·         You may use any books, notes, or other materials that you wish, but avoid spending too much time on any one question. 

·         Partial credit may be awarded on all questions. 

·         The maximum possible number of points is 100.

·         You should have 4 pages, counting this one.


Part 1: True, False, and Explain

(10 points each - 2 for the right answer, and 8 for the explanation)

State whether each of the following six propositions is true or false.  In 2-3 sentences (and clearly-labeled diagrams, when helpful), explain why.


1.  During the 20th century, the fraction of women in the U.S. workforce sharply increased. 


T, F, and Explain:  This was clearly bad for the average male American worker because it increased Aggregate Labor Supply.












2. T, F, and Explain:  It is economically efficient for government to provide necessities like food, health care, and housing free of charge.











3. “Cheating on exams is only cheating yourself.”


T, F, and Explain:  The human capital model of education agrees; the signaling model of education disagrees.










4.  “During the era of mass immigration to the United States, American employers discovered that putting Irish and Italian immigrants in the same work crew produced a high probability of violence, especially if these were jobs that required the workers to live together for long periods of time – in crews constructing railroads or canals, for example.”  (Sowell, Race and Culture)


T, F, and Explain:  The result, Sowell explains, was that railroads and canals rarely employed Italian workers.













5.  Suppose women’s wages go up.


T, F, and Explain:  The effect on child-bearing is unclear because the income and substitution effects move in opposite directions.












6.  T, F, and Explain:  Looking at market prices tells us nothing about the NET externalities of population.












Part 2: Short Answer

(20 points each)

In 4-6 sentences, answer both of the following questions.


1.  How would Krugman (The Accidental Theorist, pp.52-65) react to Caplan on “Why the Standard View of the Welfare State Is Wrong”?  Base your answer as closely as possible on Krugman’s actual words, and be specific!





















2. Suppose that the government decides to “overcome the legacy of racial and gender discrimination” by setting the minimum wage for non-whites and women 50% above the minimum wage for white males.  What are the likely effects of this legislation?