December 29, 2022
So, naturally, a few weeks ago, I decided to test ChatGPT’s price theory acumen. Suffice it to say that I think I have at least a semester or two left before the robots “steal” my job (for the record, I’m with Alex—no compelling reason to think “this time is different.”)
I wouldn’t call ChatGPT’s first attempt at a price theory quiz “bad”—only lacking. It was wooden, AP-Micro-style economics.
I suggested: “Write a quiz with original price theory questions”
ChatGPT:
“Sure! Here are five original price theory questions:
1.
The law of supply states that, other things being equal, an increase in the price of a good will lead to:
a) An increase in the quantity of the good supplied
b) A decrease in the quantity of the good supplied
c) No change in the quantity of the good supplied
d) It is impossible to determine the effect on the quantity of the good supplied
2.
The demand curve for a good is typically:
a) Upward sloping
b) Downward sloping
c) Horizontal
d) Vertical
3.
When a market is in equilibrium, the quantity of a good demanded is equal to the:
a) Quantity supplied
b) Price of the good
c) Total revenue earned by firms selling the good
d) Marginal cost of production for firms producing the good
4.
An increase in the price of a good that is a complement to another good will typically lead to:
a) An increase in the demand for the other good
b) A decrease in the demand for the other good
c) No change in the demand for the other good
d) It is impossible to determine the effect on the demand for the other good
5.
The price elasticity of demand measures the:
a) Percentage change in the quantity demanded of a good in response to a percentage change in the price of the good
b) Percentage change in the price of a good in response to a percentage change in the quantity demanded of the good
c) Absolute change in the quantity demanded of a good in response to an absolute change in the price of the good
d) Absolute change in the price of a good in response to an absolute change in the quantity demanded of the good
I hope these questions are helpful! Let me know if you have any additional questions.”
So polite.
Yet…no margins of adjustment, property rights, or adaptation. The economic point of view is only faintly detectable in this hash of definitions and facts.
By contrast, here are few questions I’ve posed to my Econ 101 students over the past few semesters:
1.
T/F/Explain. Relative to the market-clearing price and quantity, a “surplus” indicates a greater number of exchanges.
2.
The price of A rises, which eventually causes the quantity demanded of B to increase, though the demand curve for B does not change. Goods A and B are:
1.
Substitutes in production
2.
Substitutes in consumption
3.
Complements in production
4.
Complements in consumption
5.
Unrelated
3.
In class, it was argued that a price ceiling on low-income apartments may, ceteris paribus:
1.
Raise the price and reduce the quantity of luxury apartments
2.
Lower the price and reduce the quantity of luxury apartments
3.
Lower the price and increase the quantity of luxury apartments
4.
Eliminate luxury apartments altogether
5.
Likely have absolutely no effect on luxury apartments since the price ceiling is on low-income apartments
4.
A producer subsidy:
1.
Shifts the supply curve to the right and allows for profit as long as the subsidy is in place
2.
Shifts the supply curve to the left and allows for profit as long as the subsidy is in place
3.
Shifts the supply curve to the right and invites new entry, which eliminates profit
4.
Shifts the supply curve to the left and invites new entry, which eliminates profit
5.
None of the above
5.
How might banning carcinogenic pesticides lead to more cancer?
On this last question, I’m indebted to Steven Landsburg. Carcinogenic pesticides might indeed be carcinogenic, but they also lead to an increase in the supply of produce—fresh fruits and vegetables. When you ban these pesticides, supply shifts left. The price of fresh produce rises, and people substitute into relatively cheaper food that’s less healthy. As people consume fewer natural vitamins, rates of cancer may increase, but it takes the economic point of view to see it!
So far, the economic point of view seems to be alluding ChatGPT. Here is its answer to the carcinogenic pesticide question:
“It is generally believed that banning carcinogenic pesticides would likely lead to a reduction in cancer rates, not an increase. Carcinogenic pesticides are chemicals that have been shown to cause cancer in humans or animals. Exposure to these pesticides has been linked to an increased risk of certain types of cancer, such as leukemia, lymphoma, and cancer of the brain, breast, prostate, and lung.
There are several reasons why banning carcinogenic pesticides could potentially lead to a reduction in cancer rates. First, banning these pesticides would reduce the amount of exposure that people have to them. This would likely lead to a decrease in the number of people who are exposed to these chemicals and, as a result, a decrease in the number of people who develop cancer as a result of exposure to these chemicals.
Second, banning carcinogenic pesticides could also lead to the development and use of safer alternative pesticides. This would allow farmers and other users of pesticides to control pests and diseases without exposing themselves or others to potentially harmful chemicals.
Overall, while there may be some short-term challenges associated with banning carcinogenic pesticides, such as finding suitable alternative pesticides or adjusting to new pest control practices, the long-term benefits are likely to outweigh these challenges and lead to a reduction in cancer rates.”
Yawn.