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Difficulty: HardCentral Ideas

In 1966, economists William Baumol and William Bowen proposed that while technological innovation drives productivity growth in manufacturing, sectors like the performing arts remain labor-intensive and resistant to such efficiencies. A string quartet still requires four musicians playing for the same duration as it did in the nineteenth century. Consequently, because performing arts organizations must increase salaries to compete for talent with higher-productivity industries despite experiencing no corresponding productivity gains, their operating costs rise disproportionately. Rather than reflecting mismanagement or declining audiences, this "cost disease" is an inevitable structural feature of service industries where human labor is the end product itself.

Which choice best states the main idea of the text?

  1. A
    Service-oriented industries are generally less efficient and more poorly managed than manufacturing industries in modern economies.
  2. The rising expenses of performing arts organizations are a structural inevitability caused by the need to raise salaries in a labor-intensive sector that cannot easily increase its productivity.Answer
  3. C
    Performing arts organizations are suffering from rising costs primarily because interest in classical music has declined since the nineteenth century.
  4. D
    Technological innovation will eventually allow performing arts organizations to reduce their dependence on human musicians and stabilize their operating budgets.

Answer

The rising expenses of performing arts organizations are a structural inevitability caused by the need to raise salaries in a labor-intensive sector that cannot easily increase its productivity.
The correct answer accurately captures the core explanation of the passage. The text details that performing arts organizations face rising costs because they must increase salaries to compete with high-productivity industries, even though they cannot improve their own labor efficiency due to the inherently labor-intensive nature of their services. The author concludes that this cost rise is an inevitable structural characteristic.

Step-by-Step Solution

1
Identify the primary topic and key terms in the passage.
The passage discusses 'cost disease' in the performing arts and other labor-intensive service industries.
Establishing the topic helps narrow down what the central idea must address.
2
Analyze the causal relationship described in the passage.
The cost disease occurs because performing arts organizations must raise salaries to compete for talent, yet they cannot experience the productivity gains seen in manufacturing due to their labor-intensive nature.
Understanding the logic of the argument reveals the core explanation behind the phenomenon.
3
Synthesize the author's conclusion to determine the main idea.
The rise in operating costs is an inevitable structural feature of these labor-intensive service industries, not a result of mismanagement or poor audience turnouts.
The central idea must capture both the cause (labor-intensive nature and salary competition) and the effect (inevitable cost increases).

Key Concept

Central Ideas
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