12:14 PM iPad 35% courses aplia.com Mac OS X semite Essent... Aplia: Student Que

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12:14 PM iPad 35% courses aplia.com Mac OS X semite Essent... Aplia: Student Question Course: FMIS 2201 Inform. ay15 moodle umn.edu/plu.. aplia ECON 1022 Section 3 Fall 2015 Misrak Teka Sign Out Customer Support Personalized Reviews Course Materials Grades Discussion Home Economic Growth: Theory and Policy Graded Assignment I Read Chapter 7 l Back to Assignment Due Tuesday 10.27.15 at 06:00 PM Score: 12 Attempts: 7. The cost disease of the personal services Three main ideas help explain why the prices of some services, such as education, health care, and the performing arts, continue to rise relative to those of other goods or services. F in the following table by selecting the missing idea 2. Productivity cannot or does not grow in certain personally provided services. 3. Real wages in different occupations must rise at similar rates in the long run Using these three ideas, indicate which of the following statements about hockey players and factory workers is true in accordance with the cost disease of the personal services? Check all that apply. O Because hockey players are no more productive than they used to be but factory workers are, the real wage of factory workers must grow faster than that of hockey players. O n the long run, the real wages of hockey players and factory workers must grow at the economy-wide productivity growth rate O Wages of hockey players rise at a slower rate than their productivity growth. Save & Continue Copyright Notice Accessibility Terms of U vacy Notice Security Notice Session 59:40 Timeout

Explanation / Answer

The cost disease of the personal services, sometimes called “Baumol’s disease,” refers to the tendency of costs and prices. The cost disease is completely independent of any increase in the demand for personal services. The inexorable logic of rising cost applies even if we do not increase our consumption of personal services over time.

In the long run, the real wages of hockey players and factory workers must grow at the economic wide productivity growth rate.

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