Mar 15, 2023·edited Mar 15, 2023

I wonder if it does any better if you tell it that the test is being graded by Bryan Caplan and its goal is to get the highest possible score. Maybe then it would eg notice the disemployment effects of minimum wage.

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I'm going to be honest, a lot of this strikes me as debatable, e.g.:

""3. Suppose the government starts licensing car mechanics, but this fails to raise the quality of their work. T, F, and Explain: Mechanics’ wages will definitely rise.

Suggested answer:

TRUE. Licensing reduces supply, which raises wages and reduces quantity. If licensing raised quality, demand would go up, too. But by assumption, that didn’t happen. (And if it did, it would only reinforce the conclusion that wages go up!)

GPT-4’s answer

False. Although licensing requirements can create barriers to entry for car mechanics, which may lead to a reduction in the supply of mechanics and potentially higher wages, it is not guaranteed that their wages will definitely rise. If the licensing does not raise the quality of their work, consumers may not be willing to pay more for the same quality of service, and competition among existing mechanics could keep wages from rising. Additionally, if the licensing process is not particularly difficult or costly, it may not effectively limit the supply of mechanics, and therefore, may not lead to higher wages.""

"Definitely" is incredibly strong. Suppose the rule is bought in by a city government, and there are ten mechanics before it, the licensing requirements are not especially onerous, and as a result the number of mechanics remains static despite a nominal barrier to entry. We are given no assurances that the licensing process *actually reduces supply*- it could be super easy. For these reasons, I would be *very* reluctant to use the word "definitely". Definitely is a term that should pretty much never be used in economics.

And don't even get me started on the minimum wage question.

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