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. Fill in the following table by choosing the missing idea. 1. (Option A. Real wages in different occupations must rise at similar rates in the long run. Option B. Real wages in different occuptions can rise at varying rates in the long run. Option C. Only Real wages in similar occupations must rise at similar rates in the long run). 2. Real wages tend to rise at the same rate as labor productivity. 3. Productivity cannot or does not grow for certain services. Using these three ideas, indicate which of the following statements about high school teachers and factory workers is true in accordance with the cost disease of the personal services? Select all that apply. A. Wages of high school teachers will rise at a faster rate than the rate of productivity growth. B. Because high school teachers 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 high school teachers. C. The services of high school teachers will become relatively more expensive than those of factory workers.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter18: Pricing The Factors Of Production

Section: Chapter Questions

Problem 3TY

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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. Fill in the following table by choosing the missing idea.

1. (Option A. Real wages in different occupations must rise at similar rates in the long run. Option B. Real wages in different occuptions can rise at varying rates in the long run. Option C. Only Real wages in similar occupations must rise at similar rates in the long run).

2. Real wages tend to rise at the same rate as labor productivity.
3. Productivity cannot or does not grow for certain services.

Using these three ideas, indicate which of the following statements about high school teachers and factory workers is true in accordance with the cost disease of the personal services? Select all that apply.

A. Wages of high school teachers will rise at a faster rate than the rate of productivity growth.

B. Because high school teachers 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 high school teachers.

C. The services of high school teachers will become relatively more expensive than those of factory workers.

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