This preview shows page 1. Sign up to view the full content.
Unformatted text preview: a routine checkup improves over time. Checkups now may
include EKGs, for example. Medical services are particularly affected by this
problem since there are continual improvements in medical technology. b. The new method represents a 10% quality increase. c. There is a 5% true price increase. The other 10% represents a quality increase.
The quality-adjusted price of checkups using the new method is only 5% higher
than checkups using the old method last year. d. a. Measured GDP increases by $10+$12=$22. (Strictly, this involves mixing the
final goods and income approaches to GDP. Assume here that the $12 per hour
of work creates a final good worth $12.) b. 9. You need to know the relative value of pregnancy checkups with and without
ultra-sounds in the year the new method is introduced. Still, since everyone
chooses the new method, we can say that the quality-adjusted price of checkups
has risen by less than 15%. Some of the observed 15% increase represents an
View Full Document
This note was uploaded on 01/29/2014 for the course ECON 110A taught by Professor Staff during the Winter '08 term at UCSD.
- Winter '08