1. In the year 302, the Roman emperor Diocletian “commanded that there should be cheapness.” His edict declared:

Unprincipled greed appears wherever our armies, following the command of the public weal, march, not only in villages and cities but also upon all highways, with the result that prices of foodstuffs mount not only fourfold and eightfold, but transcend all measure. Our law shall fix a measure and a limit to this greed.

Why do you think Diocletian found food prices higher wherever he marched with his armies?

What result would you anticipate from the command that "there should be cheapness"?

2. Suppose that the supply curve for gold is very steep (positively sloped, but almost vertical).

Would a $  T  tax tend to have a relatively large or a relatively small effect upon the quantity exchanged in the market? Would there tend to be a relatively large or a relatively small effect upon the gross price paid by buyers? Upon the net price received by sellers?

Explain in terms of the underlying economic meaning.