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Re: Four legal approaches may be followed in attempting to channel [#permalink]
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pathy wrote:
2-1A SECTION B 17-24

Four legal approaches may be followed in attempting to channel technological development in socially useful direction: specific directives, market incentive modifications, criminal prohibitions, and changes in decision-making structures. Specific directives involve the government’s identifying one or more factors controlling research, development, or implementation of a given technology. Directives affecting such factors may vary from administrative regulation of private activity to government ownership of a technological operation. Market incentive modifications are deliberate alterations of the market within which private decisions regarding the development and implementation of technology are made. Such modifications may consist of imposing taxes to cover the costs to society of a given technology, granting subsidies to pay for social benefits of a technology, creating the right to sue to prevent certain technological development, or easing procedural rules to enable the recovery of damages to compensate for harm caused by destructive technological activity. Criminal prohibitions may modify technological activity in areas impinging on fundamental social values, or they may modify human behavior likely to result from technological applications—for example, the deactivation of automotive pollution control devices in order to improve vehicle performance. Alteration of decision-making structures includes all possible modifications in the authority, constitution, or responsibility of private and public entities deciding questions of technological development and implementation. Such alterations include the addition of public-interest members to corporate boards, the imposition by statute of duties on governmental decision-makers, and the extension of warranties in response to consumer action.

Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources. When the object is optimal resource allocation, that combination of legal methods should be used that most nearly yields the allocation that would exist if there were no external costs resulting from allocating resources through market activity. There are external costs when the price set by buyers and sellers of goods fails to include some costs, to anyone, that result from the production and use of the goods. Such costs are internalized when buyers pay them.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation, because the private net product and the social net product of market activity are not often identical. If all externalities were internalized, transactions would occur until bargaining could no longer improve the situation, thus giving an optimal allocation of resources at a given time.


1. ​​The passage is primarily concerned with describing

(A) objectives and legal method for directing technological development
(B) technical approaches to the problem of controlling market activity
(C) economic procedures for facilitating transactions between buyers and sellers
(D) reasons for slowing the technological development in light of environmentalist objections
(E) technological innovations making it possible to achieve optimum allocation of resources


​2. ​The author cites air pollution from motor vehicles in lines 54-56 in order to

(A) revise cost estimates calculated by including the costs of resources
(B) evaluate legal methods used to prevent technological developments
(C) give examples of costs not included in buyer-seller bargains
(D) refute hypotheses not made on the basis of monetary exchange values
(E) commend technological research undertaken for the common welfare


3. ​​​​According to the passage, transactions between private buyers and sellers have effects on society that generally

(A) are harmful when all factors are considered
(B) give rise to ever-increasing resource costs
(C) reflect an optimal allocation of natural resources
(D) encompass more than the effects on the buyers and sellers alone
(E) are guided by legal controls on the development of technology


4. ​​​​​​​​It can be inferred from the passage that the author does NOT favor which of the following?

(A) Protecting the environment for future use
(B) Changing the balance of power between opposing interests in business
(C) Intervening in the activity of the free market
(D) Making prices reflect costs to everyone in society
(E) Causing technological development to cease


5. ​​​​​A gasoline-conservation tax on the purchase of large automobiles, with the proceeds of the tax rebated to purchasers of small automobiles, is an example of

(A) a specific directive
(B) a market incentive modification
(C) an optimal resource allocation
(D) an alteration of a decision-making structure
(E) an external cost


6. ​​​​​​​​If there were no external costs, as they are described in the passage, which of the following would be true?

(A) All technology-control methods would be effective.
(B) Some resource allocations would be illegal.
(C) Prices would include all costs to members of society.
(D) Some decision-making structures would be altered.
(E) The availability of common goods would increase.


7. ​​​​​​The author assumes that, in determining what would be an optimal allocation of resources, it would be possible to

(A) assign monetary value to all damage resulting from the use of technology
(B) combine legal methods to yield the theoretical optimum
(C) convince buyers to bear the burden of damage from technological developments
(D) predict the costs of new technological developments
(E) derive an equation making costs depend on prices


8. ​​​​​​On the basis of the passage, it can be inferred that the author would agree with which of the following statements concerning technological development?

(A) The government should own technological operations.
(B) The effect of technological development cannot be controlled.
(C) Some technological developments are beneficial.
(D) The current state of technological development results in a good allocation of resources.
(E) Applications of technological developments are criminally destructive.





1. The passage is primarily concerned with describing

(A) objectives and legal method for directing technological development…correct

Para1 summary
Four legal approaches may be followed in attempting to channel technological development in socially useful direction
Para2&3 summary
Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources.

(B) technical approaches to the problem of controlling market activity…incorrect
(C) economic procedures for facilitating transactions between buyers and sellers…incorrect
(D) reasons for slowing the technological development in light of environmentalist objections…incorrect
(E) technological innovations making it possible to achieve optimum allocation of resources…incorrect


2. The author cites air pollution from motor vehicles in lines 54-56 in order to

When the object is optimal resource allocation, that combination of legal methods should be used that most nearly yields the allocation that would exist if there were no external costs resulting from allocating resources through market activity. There are external costs when the price set by buyers and sellers of goods fails to include some costs, to anyone, that result from the production and use of the goods. Such costs are internalized when buyers pay them.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation, because the private net product and the social net product of market activity are not often identical.


(A) revise cost estimates calculated by including the costs of resources
(B) evaluate legal methods used to prevent technological developments
the author only says to "control" rather than prevent technological development
(C) give examples of costs not included in buyer-seller bargains….correct
since we can infer from the end of paragraph2&3
Such costs are internalized when buyers pay them.(thus the above sentences written in the passage still not internalized)

If all externalities were internalized, transactions would occur until bargaining could no longer improve the situation, thus giving an optimal allocation of resources at a given time.
that we can know yellow mark all talks about nonoptional resource allocation
thus “air pollution from motor vehicles” is an examples to illustrate to the sentence(buyers and sellers of goods fails to include some
costs)

(D) refute hypotheses not made on the basis of monetary exchange values
(E) commend technological research undertaken for the common welfare






3. According to the passage, transactions between private buyers and sellers have effects on society that generally

There are external costs when the price set by buyers and sellers of goods fails to include some costs, to anyone, that result from the production and use of the goods. Such costs are internalized when buyers pay them.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation,


(A) are harmful when all factors are considered….out of scope
(B) give rise to ever-increasing resource costs….out of scope

(C) reflect an optimal allocation of natural resources
…incorrect(because maybe a nonoptimal resource allocation)

(D) encompass more than the effects on the buyers and sellers alone…correct

imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease:

(E) are guided by legal controls on the development of technology…incorrect

Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation,
-transaction in air pollution isn’t an effective use of these method to control technologynot guided by legal control


4. It can be inferred from the passage that the author does NOT favor which of the following?

(A) Protecting the environment for future use….incorrect

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation, because the private net product and the social net product of market activity are not often identical.
the author has the intention to address the environment issue

(B) Changing the balance of power between opposing interests in business…incorrect

Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources.

(C) Intervening in the activity of the free market….incorrect

When the object is optimal resource allocation, that combination of legal methods should be used that most nearly yields the allocation that would exist if there were no external costs resulting from allocating resources through market activity.


(D) Making prices reflect costs to everyone in society…incorrect

There are external costs when the price set by buyers and sellers of goods fails to include some costs,
these externalities result from failure to place a price on air, thus making it a free good, common to all.

(E) Causing technological development to cease….correct

Not “cease”, but rather to “control” or “channel technological development in socially useful direction”

Four legal approaches may be followed in attempting to channel technological development in socially useful direction:


5. A gasoline-conservation tax on the purchase of large automobiles, with the proceeds of the tax rebated to purchasers of small automobiles, is an example of

(A) a specific directive
(B) a market incentive modification…correct
Such modifications may consist of imposing taxes to cover the costs to society of a given technology

(C) an optimal resource allocation
(D) an alteration of a decision-making structure
(E) an external cost



6. If there were no external costs, as they are described in the passage, which of the following would be true?

(A) All technology-control methods would be effective.
only mention about that combination of legal methods should be used
thus we cannot infer (A) is correct
(B) Some resource allocations would be illegal.
(C) Prices would include all costs to members of society…correct
(D) Some decision-making structures would be altered.
(E) The availability of common goods would increase.

Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources. When the object is optimal resource allocation, that combination of legal methods should be used that most nearly yields the allocation that would exist if there were no external costs(A) resulting from allocating resources through market activity. There are external costs when the price set by buyers and sellers of goods fails to include some costs(B), to anyone, that result from the production and use of the goods. Such costs are internalized when buyers pay them.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air(C), thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation, because the private net product and the social net product of market activity are not often identical.

--this yellow mark all talks about the same thing “nonoptimal resource allocation”, also the above green mark talks about “optimal resource allocation”
since we can infer from the end of each paragraph
Such costs are internalized when buyers pay them.(the above sentences still not internalized)

If all externalities were internalized, transactions would occur until bargaining could no longer improve the situation, thus giving an optimal allocation of resources at a given time.
that we can know yellow mark talks about nonoptional resource allocation

There are external costs when the price set by buyers and sellers of goods fails to include some costs(B), to anyone, that result from the production and use of the goods.


So if (A) occur, (B) must not occur, thus the situation opposite to (B), that is, include all costs to members of society must occur



7. The author assumes that, in determining what would be an optimal allocation of resources, it would be possible to

Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources. When the object is optimal resource allocation, that combination of legal methods should be used that most nearly yields the allocation that would exist if there were no external costs resulting from allocating resources through market activity. There are external costs when the price set by buyers and sellers of goods fails to include some costs, to anyone, that result from the production and use of the goods. Such costs are internalized when buyers pay them.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation, because the private net product and the social net product of market activity are not often identical. If all externalities were internalized, transactions would occur until bargaining could no longer improve the situation, thus giving an optimal allocation of resources at a given time.




(A) assign monetary value to all damage resulting from the use of technology
If all externalities(all damage) were internalized(assign monetary value), transactions would occur until bargaining could no longer improve the situation, thus giving an optimal allocation of resources at a given time.

(B) combine legal methods to yield the theoretical optimum…incorrect
When the object is optimal resource allocation, that combination of legal methods “should be used”(thus it must be practical rather than theorectical) that most nearly yields the allocation that would exist if there were no external costs resulting from allocating resources through market activity.


(C) convince buyers to bear the burden of damage from technological developments…out of scope
(D) predict the costs of new technological developments…out of scope
(E) derive an equation making costs depend on prices…out of scope



8. On the basis of the passage, it can be inferred that the author would agree with which of the following statements concerning technological development?

(A) The government should own technological operations….out of scope
(B) The effect of technological development cannot be controlled….out of scope
(C) Some technological developments are beneficial….correct
(D) The current state of technological development results in a good allocation of resources….incorrect
please see the explanation below
(E) Applications of technological developments are criminally destructive. ….out of scope


Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources. When the object is optimal resource allocation, that combination of legal methods should be used that most nearly yields the allocation that would exist if there were no external costs resulting from allocating resources through market activity. There are external costs when the price set by buyers and sellers of goods fails to include some costs, to anyone, that result from the production and use of the goods. Such costs are internalized when buyers pay them.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all. Such externalities lead to nonoptimal resource allocation, because the private net product and the social net product of market activity are not often identical. If all externalities were internalized, transactions would occur until bargaining could no longer improve the situation, thus giving an optimal allocation of resources at a given time.

refer to para2&3
Effective use of these methods to control technology depends on whether or not the goal of regulation is the optimal allocation of resources.
thus we have two possibility
(1)maybe optimal
(2)maybe nonoptimal

also from the last sentence
If all externalities were internalized, transactions would occur until bargaining could no longer improve the situation, thus giving an optimal allocation of resources at a given time.
thus “optimal” is just an assumption
(air pollution problem mention in the prior sentences is still a nonoptional problem)

(D) isn’t correct since its too predisposed to optimal side
As for (C), some technological developments are beneficial(results in a good allocation of resources) whereas some are not….correct
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Re: Four legal approaches may be followed in attempting to channel [#permalink]
Can anyone give an explanation for question 8? Thanks!!
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Re: Four legal approaches may be followed in attempting to channel [#permalink]
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Hi gauranggarg,

For RC also, we can effectively make use of POE:

8. ​​​​​​On the basis of the passage, it can be inferred that the author would agree with which of the following statements concerning technological development?

(A) The government should own technological operations. >>> Not mentioned. The author merely said that the Govt has 4 legal ways to channel the development not own. So eliminate.

(B) The effect of technological development cannot be controlled. >>> First of all it is extreme and notice that the passage did not use any extreme language. Moreover from this text, "Criminal prohibitions may modify technological activity in areas impinging on fundamental social values, or they may modify human behavior likely to result from technological applications" we can infer that it can be controlled.

(C) Some technological developments are beneficial.

(D) The current state of technological development results in a good allocation of resources. >>> The current state is not mentioned. In addition, the last paragraph in the passage negates this statement. So eliminate this as well.

(E) Applications of technological developments are criminally destructive. >> From the same text highlighted in choice B, we know it can be controlled but cannot know for sure whether they are destructive criminally. Eliminate this as well.

So IMO C.

Hope this helps and kudos if u like my explanation.
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Re: Four legal approaches may be followed in attempting to channel [#permalink]
For Q3, it is given that "imposes external costs on all those exposed to it" But no where it is given that it is more than or less than.

So how is option (D) correct ? " encompass more than the effects on the buyers and sellers alone".

Sajjad1994 wts your take on this ?
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Re: Four legal approaches may be followed in attempting to channel [#permalink]
Expert Reply
Jks3000 wrote:
For Q3, it is given that "imposes external costs on all those exposed to it" But no where it is given that it is more than or less than.

So how is option (D) correct ? " encompass more than the effects on the buyers and sellers alone".

Sajjad1994 wts your take on this ?


Hello jks3000

You have identified the related text correctly but took it to the wrong side, probably didn't understand what D is saying. Here is some more related text in the passage.

Air pollution from motor vehicles imposes external costs on all those exposed to it, in the form of soiling, materials damage, and disease: these externalities result from failure to place a price on air, thus making it a free good, common to all.

It clearly supports that the transaction between the buyers and sellers have a lot more effects than the effects on the two mentioned.

Thank you
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Re: Four legal approaches may be followed in attempting to channel [#permalink]
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