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# Most economists in the United States seem captivated by the spell of t

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Most economists in the United States seem captivated by the spell of t  [#permalink]

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Updated on: 17 Aug 2019, 03:54
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Most economists in the United States seem captivated by the spell of the free market. Consequently, nothing seems good or normal that does not accord with the requirements of the free market. A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious. Accordingly, it requires a major act of will to think of price-fixing (the determination of prices by the seller) as both “normal” and having a valuable economic function. In fact, price-fixing is normal in all industrialized societies because the industrial system itself provides, as an effortless consequence of its own development, the price-fixing that it requires. Modern industrial planning requires and rewards great size. Hence, a comparatively small number of large firms will be competing for the same group of consumers. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than its competitors charge is commonly recognized by advocates of free-market economic theories. But each large firm will also act with full consideration of the needs that it has in common with the other large firms competing for the same customers. Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products. Most economists do not see price-fixing when it occurs because they expect it to be brought about by a number of explicit agreements among large firms; it is not.

Moreover, those economists who argue that allowing the free market to operate without interference is the most efficient method of establishing prices have not considered the economies of non-socialist countries other than the United states. These economies employ intentional price-fixing, usually in an overt fashion. Formal price-fixing by cartel and informal price-fixing by agreements covering the members of an industry are commonplace. Were there something peculiarly efficient about the free market and inefficient about price-fixing, the countries that have avoided the first and used the second would have suffered drastically in their economic development. There is no indication that they have.

Socialist industry also works within a framework of controlled prices. In the early 1970’s, the Soviet Union began to give firms and industries some of the flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the United States have hailed the change as a return to the free market. But Soviet firms are no more subject to prices established by a free market over which they exercise little influence than are capitalist firms; rather, Soviet firms have been given the power to fix prices.
1. The primary purpose of the passage is to

(A) refute the theory that the free market plays a useful role in the development of industrialized societies

(B) suggest methods by which economists and members of the government of the United States can recognize and combat price-fixing by large firms

(C) show that in industrialized societies price-fixing and the operation of the free market are not only compatible but also mutually beneficial

(D) explain the various ways in which industrialized societies can fix prices in order to stabilize the free market

(E) argue that price-fixing, in one form or another, is an inevitable part of and benefit to the economy of any industrialized society

Spoiler: :: OA
E

2. The passage provides information that would answer which of the following questions about price-fixing?

I. What are some of the ways in which prices can be fixed?
II. For what products is price-fixing likely to be more profitable that the operation of the free market?
III. Is price-fixing more common in socialist industrialized societies or in non-socialist industrialized societies?

(A) I only
(B) III only
(C) I and II only
(D) II and III only
(E) I, II, and III

Spoiler: :: OA
A

3. The author’s attitude toward “Most economists in the United States” (line 1) can best be described as

(A) spiteful and envious
(B) scornful and denunciatory
(C) critical and condescending
(D) ambivalent but deferential
(E) uncertain but interested

Spoiler: :: OA
C

4. It can be inferred from the author’s argument that a price fixed by the seller “seems pernicious” (line 7) because

(A) people do not have confidence in large firms
(B) people do not expect the government to regulate prices
(C) most economists believe that consumers as a group should determine prices
(D) most economists associate fixed prices with communist and socialist economies
(E) most economists believe that no one group should determine prices

Spoiler: :: OA
C

5. The suggestion in the passage that price-fixing in industrialized societies is normal arises from the author’s statement that price-fixing is

(A) a profitable result of economic development
(B) an inevitable result of the industrial system
(C) the result of a number of carefully organized decisions
(D) a phenomenon common to industrialized and non-industrialized societies
(E) a phenomenon best achieved cooperatively by government and industry

Spoiler: :: OA
B

6. According to the author, price-fixing in non-socialist countries is often

(A) accidental but productive
(B) illegal but useful
(C) legal and innovative

Spoiler: :: OA
E

7. According to the author, what is the result of the Soviet Union’s change in economic policy in the 1970’s?

(A) Soviet firms show greater profit.
(B) Soviet firms have less control over the free market.
(D) Soviet firms have some authority to fix prices.
(E) Soviet firms are more responsive to the free market.

Spoiler: :: OA
D

8. With which of the following statements regarding the behavior of large firms in industrialized societies would the author be most likely to agree?

(A) The directors of large firms will continue to anticipate the demand for products.

(B) The directors of large firms are less interested in achieving a predictable level of profit than in achieving a large profit.

(C) The directors of large firms will strive to reduce the costs of their products.

(D) Many directors of large firms believe that the government should establish the prices that will be charged for products.

(E) Many directors of large firms believe that the price charged for products is likely to increase annually.

Spoiler: :: OA
A

9. In the passage, the author is primarily concerned with

(A) predicting the consequences of a practice
(B) criticizing a point of view
(C) calling attention to recent discoveries
(D) proposing a topic for research
(E) summarizing conflicting opinions

Spoiler: :: OA
B

Originally posted by pmenon on 07 Jun 2009, 20:52.
Last edited by SajjadAhmad on 17 Aug 2019, 03:54, edited 4 times in total.
Updated - Complete topic (170).
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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06 Nov 2018, 22:37
7

Official explanations

1. The primary purpose of the passage is to

(A) refute the theory that the free market plays a useful role in the development of industrialized societies

(B) suggest methods by which economists and members of the government of the United States can recognize and combat price-fixing by large firms

(C) show that in industrialized societies price-fixing and the operation of the free market are not only compatible but also mutually beneficial

(D) explain the various ways in which industrialized societies can fix prices in order to stabilize the free market

(E) argue that price-fixing, in one form or another, is an inevitable part of and benefit to the economy of any industrialized society

The best answer is E. The author contends that price-fixing is normal and beneficial in industrialized societies. The author proceeds to support this assertion with descriptions of various forms of price-fixing in various kinds of industrialized societies. Moreover, in the context of a discussion of nonsocialist countries other than the United States, the author indirectly restates the argument in favor of price-fixing.

2. The passage provides information that would answer which of the following questions about price-fixing?

I. What are some of the ways in which prices can be fixed?
II. For what products is price-fixing likely to be more profitable that the operation of the free market?
III. Is price-fixing more common in socialist industrialized societies or in non-socialist industrialized societies?

(A) I only
(B) III only
(C) I and II only
(D) II and III only
(E) I, II, and III

This question asks whether one or more of the questions identified by Roman numerals can be answered on the basis of the information given in the passage. In questions of this kind, each part identified by a Roman numeral must be considered individually. The question I can be answered by the information in following excerpts which mention some different ways of fixing prices. Questions II and III cannot be answered from information provided by the passage. The best answer, therefore, is A

Quote:
• Each large firm will thus avoid significant price-cutting
• they expect it to be brought about by a number of explicit agreements among large firms
• These economies employ intentional price-fixing, usually in an overt fashion. Formal price-fixing by cartel and informal price-fixing by agreements covering the members of an industry are commonplace.
• the Soviet Union began to give firms and industries some of the flexibility in adjusting prices that a more informal evolution has accorded the capitalist system.

3. The author’s attitude toward “Most economists in the United States” (line 1) can best be described as

(A) spiteful and envious
(B) scornful and denunciatory
(C) critical and condescending
(D) ambivalent but deferential
(E) uncertain but interested

The best answer is C. Determining the author's attitude toward a topic requires locating all references to the topic in the passage and considering both the literal meanings and the connotations of the words used concerning the topic. Thus, the author refers to "most economists" or "economists in the United States" or "those economists". The author describes them as "captivated by the spell of the free market," as failing to see price- fixing when it occurs, as failing to consider the economies of nonsocialist countries other than the United States, and as mistakenly "hailing" price-fixing in the Soviet Union as a return to the free market. The choice that best describes these references is "critical and condescending."

4. It can be inferred from the author’s argument that a price fixed by the seller “seems pernicious” (line 7) because

(A) people do not have confidence in large firms
(B) people do not expect the government to regulate prices
(C) most economists believe that consumers as a group should determine prices
(D) most economists associate fixed prices with communist and socialist economies
(E) most economists believe that no one group should determine prices

The best answer is C. Lines 1-7 allow one to infer that it is to "Most economists" (line I) that a price fixed by the seller "seems pernicious," and that these economists consider
price-fixing pernicious because they believe that only the "aggregate of consumers" (line 7) should establish prices.

5. The suggestion in the passage that price-fixing in industrialized societies is normal arises from the author’s statement that price-fixing is

(A) a profitable result of economic development
(B) an inevitable result of the industrial system
(C) the result of a number of carefully organized decisions
(D) a phenomenon common to industrialized and non-industrialized societies
(E) a phenomenon best achieved cooperatively by government and industry

The best answer is B, based on lines 11-15, which state that price-fixing is normal in all industrialized societies because the industrial system provides price-fixing " as an effortless consequence of its own development."

6. According to the author, price-fixing in non-socialist countries is often

(A) accidental but productive
(B) illegal but useful
(C) legal and innovative

The best answer is E, based on lines 38 ("intentional price- fixing") and 41-42 ("commonplace").

7. According to the author, what is the result of the Soviet Union’s change in economic policy in the 1970’s?

(A) Soviet firma s show greater profit.
(B) Soviet firms have less control over the free market.
(D) Soviet firms have some authority to fix prices.
(E) Soviet firms are more responsive to the free market.

The best answer is D. In lines 49-53, the author states that, in the early 1970's, the Soviet Union gave firms some " flexibility in adjusting prices." In lines 58-59, the author states that what these firms have in fact been given is "the power to fix prices." Thus, the result of the Soviet Union's change in economic policy in the 1970's is choice D, "Soviet firms have some authority to fix prices ."

8. With which of the following statements regarding the behavior of large firms in industrialized societies would the author be most likely to agree?

(A) The directors of large firms will continue to anticipate the demand for products.
(B) The directors of large firms are less interested in achieving a predictable level of profit than in achieving a large profit.
(C) The directors of large firms will strive to reduce the costs of their products.
(D) Many directors of large firms believe that the government should establish the prices that will be charged for products.
(E) Many directors of large firms believe that the price charged for products is likely to increase annually.

The best answer is A. The author discusses the behavior of large firms in industrialized societies in lines 15-29. In lines 26-29, the author refers to the firms' "common interest in a stable demand for products." It can be inferred from these references that the author believes that the directors of large firms currently anticipate the demand for products. Since the author describes price-fixing as an ongoing phenomenon (lines 11-29), it can be inferred that the author would be likely to agree that the large firms' directors will also con- tinue to anticipate the demand for products.

9. In the passage, the author is primarily concerned with

(A) predicting the consequences of a practice
(B) criticizing a point of view
(C) calling attention to recent discoveries
(D) proposing a topic for research
(E) summarizing conflicting opinions

The best answer is B. Throughout the passage, the author criticizes the point of view of ' 'most economists in the United States" -those who believe that the free market is best and that price-fixing is pernicious. Thus, the first paragraph argues that price-fixing is normal and valuable in all industrialized countries. The second paragraph argues that the experience of nonsocialist countries other than the United States provides no support for the point of view of these economists. The third paragraph argues that these economists are wrong in thinking that the Soviet Union has moved toward a free market. Thus, it can be inferred that the author's primary concern is to criticize this point of view.
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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30 Jul 2010, 13:52
Most economists in the United States seem captivated by the spell of the free market. Consequently, nothing seems good or normal that does not accord with the requirements of the free market. A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious. Accordingly, it requires a major act of will to think of price-fixing (the determination of prices by the seller) as both “normal” and having a valuable economic function. In fact, price-fixing is normal in all industrialized societies because the industrial system itself provides, as an effortless consequence of its own development, the price-fixing that it requires. Modern industrial planning requires and rewards great size. Hence, a comparatively small number of large firms will be competing for the same group of consumers. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than its competitors charge is commonly recognized by advocates of free-market economic theories. But each large firm will also act with full consideration of the needs that it has in common with the other large firms competing for the same customers. Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products. Most economists do not see price-fixing when it occurs because they expect it to be brought about by a number of explicit agreements among large firms; it is not.
Moreover, those economists who argue that allowing the free market to operate without interference is the most efficient method of establishing prices have not considered the economies of non-socialist countries other than the United states. These economies employ intentional price-fixing, usually in an overt fashion. Formal price-fixing by cartel and informal price-fixing by agreements covering the members of an industry are commonplace. Were there something peculiarly efficient about the free market and inefficient about price-fixing, the countries that have avoided the first and used the second would have suffered drastically in their economic development. There is no indication that they have.
Socialist industry also works within a framework of controlled prices. In the early 1970’s, the Soviet Union began to give firms and industries some of the flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the United States have hailed the change as a return to the free market. But Soviet firms are no more subject to prices established by a free market over which they exercise little influence than are capitalist firms; rather, Soviet firms have been given the power to fix prices.

3. The author’s attitude toward “Most economists in the United States”(line 1) can best be described as
(A) spiteful and envious
(B) scornful and denunciatory
(C) critical and condescending
(D) ambivalent but deferential
(E) uncertain but interested
4. It can be inferred from the author’s argument that a price fixed by the seller “seems pernicious” (line 7) because
(A) people do not have confidence in large firms
(B) people do not expect the government to regulate prices
(C) most economists believe that consumers as a group should determine prices
(D) most economists associate fixed prices with communist and socialist economies
(E) most economists believe that no one group should determine prices
8. With which of the following statements regarding the behavior of large firms in industrialized societies would the author be most likely to agree?
(A) The directors of large firms will continue to anticipate the demand for products.
(B) The directors of large firms are less interested in achieving a predictable level of profit than in achieving a large profit.
(C) The directors of large firms will strive to reduce the costs of their products.
(D) Many directors of large firms believe that the government should establish the prices that will be charged for products.
(E) Many directors of large firms believe that the price charged for products is likely to increase annually.
..............................
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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31 Jul 2010, 09:41
1
3) c.
4) E. => "A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious" in the first paragraph
8) b => "Modern industrial planning requires and rewards great size."

What is the OA?
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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01 Aug 2010, 07:29
2. A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious.
This means that price should be determined by the consumer group.

3.Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products
As i said, that was a guess....i don't have any reason...Just saw the word "demand" haha
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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05 Aug 2012, 02:06
Can anybody explain these questions?

Question 1 (between choices A and E)
Question 2 (why is I correct and III incorrect?)
Question 3 (between choices B and C)
Question 8 (between choice A and C)

I took 19 mins and got 5/9.

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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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22 Feb 2013, 08:37
3 : either B or C ( I chose B ) . Wanted to match Pernicious . wasn't sure how condescendin does that.

4 : C
Satement says
A price that is determined by the seller or, for that matter, established by anyone other than the aggregate (group) of consumers seems pernicious.

E is close but C ooked better

8.

C (POE)

Eliminate
A - talks @ Demand
B - talks @ Profit
D and E not inferable.
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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07 Oct 2013, 09:12
3. The author’s attitude toward “Most economists in the United States”(line 1) can best be described as
(A) spiteful and envious
(B) scornful and denunciatory
(C) critical and condescending
(D) ambivalent but deferential
(E) uncertain but interested
4. It can be inferred from the author’s argument that a price fixed by the seller “seems pernicious” (line 7) because
(A) people do not have confidence in large firms
(B) people do not expect the government to regulate prices
(C) most economists believe that consumers as a group should determine prices
(D) most economists associate fixed prices with communist and socialist economies
(E) most economists believe that no one group should determine prices
8. With which of the following statements regarding the behavior of large firms in industrialized societies would the author be most likely to agree?
(A) The directors of large firms will continue to anticipate the demand for products.
(B) The directors of large firms are less interested in achieving a predictable level of profit than in achieving a large profit.
(C) The directors of large firms will strive to reduce the costs of their products.
(D) Many directors of large firms believe that the government should establish the prices that will be charged for products.
(E) Many directors of large firms believe that the price charged for products is likely to increase annually.

I have OAs for this passage:

3.C
4.C
8.A
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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04 Nov 2017, 02:53
KanakGarg wrote:

For question 8 :

Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products.

C is wrong because in the first para, it is mentioned that the directors of the large companies dont want the price to reduce because lower price leads to increased demand and they dont want to handle any unanticipated demand.

For question 6:

But Soviet firms are no more subject to prices established by a free market over which they exercise little influence than are capitalist firms; rather, Soviet firms have been given the power to fix prices. this is in the last paragragh.

C is nowhere mentioned. Hence E is right.
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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16 Apr 2018, 02:24
Most economists in the United States seem captivated by the spell of the free market. Consequently, nothing seems good or normal that does not accord with the requirements of the free market. A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious. Accordingly, it requires a major act of will to think of price-fixing (the determination of prices by the seller) as both “normal” and having a valuable economic function. In fact, price-fixing is normal in all industrialized societies because the industrial system itself provides, as an effortless consequence of its own development, the price-fixing that it requires. Modern industrial planning requires and rewards great size. Hence, a comparatively small number of large firms will be competing for the same group of consumers. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than its competitors charge is commonly recognized by advocates of free-market economic theories. But each large firm will also act with full consideration of the needs that it has in common with the other large firms competing for the same customers. Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products. Most economists do not see price-fixing when it occurs because they expect it to be brought about by a number of explicit agreements among large firms; it is not.

Moreover, those economists who argue that allowing the free market to operate without interference is the most efficient method of establishing prices have not considered the economies of non-socialist countries other than the United states. These economies employ intentional price-fixing, usually in an overt fashion. Formal price-fixing by cartel and informal price-fixing by agreements covering the members of an industry are commonplace. Were there something peculiarly efficient about the free market and inefficient about price-fixing, the countries that have avoided the first and used the second would have suffered drastically in their economic development. There is no indication that they have.

Socialist industry also works within a framework of controlled prices. In the early 1970’s, the Soviet Union began to give firms and industries some of the flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the United States have hailed the change as a return to the free market. But Soviet firms are no more subject to prices established by a free market over which they exercise little influence than are capitalist firms; rather, Soviet firms have been given the power to fix prices.

1. The primary purpose of the passage is to

(E) argue that price-fixing, in one form or another, is an inevitable part of and benefit to the economy of any industrialized society

2. The passage provides information that would answer which of the following questions about price-fixing?

I. What are some of the ways in which prices can be fixed?
II. For what products is price-fixing likely to be more profitable that the operation of the free market?
There are no products which are being discussed in the passage.
III. Is price-fixing more common in socialist industrialized societies or in non-socialist industrialized societies?

(A) I only

3. The author’s attitude toward “Most economists in the United States” (line 1) can best be described as

(C) critical and condescending

4. It can be inferred from the author’s argument that a price fixed by the seller “seems pernicious” (line 7) because

A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious.

(C) most economists believe that consumers as a group should determine prices

5. The suggestion in the passage that price-fixing in industrialized societies is normal arises from the author’s statement that price-fixing is

In fact, price-fixing is normal in all industrialized societies because the industrial system itself provides, as an effortless consequence of its own development, the price-fixing that it requires.

(B) an inevitable result of the industrial system

6. According to the author, price-fixing in non-socialist countries is often
These economies employ intentional price-fixing, usually in an overt fashion.

7. According to the author, what is the result of the Soviet Union’s change in economic policy in the 1970’s?
But Soviet firms are no more subject to prices established by a free market over which they exercise little influence than are capitalist firms

(D) Soviet firms have some authority to fix prices.

8. With which of the following statements regarding the behavior of large firms in industrialized societies would the author be most likely to agree?

Hence, a comparatively small number of large firms will be competing for the same group of consumers. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than its competitors charge is commonly recognized by advocates of free-market economic theories. But each large firm will also act with full consideration of the needs that it has in common with the other large firms competing for the same customers.

(A) The directors of large firms will continue to anticipate the demand for products.

9. In the passage, the author is primarily concerned with

(A) predicting the consequences of a practice - There are no predictions by the author. He is going against the economists.
(B) criticizing a point of view - Yes, economist's point of view.
(C) calling attention to recent discoveries - There are no recent discoveries in the passage.
(D) proposing a topic for research - Looks like he has already researched the topic and presented his findings.
(E) summarizing conflicting opinions - There is no summery present in the passage.
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Re: Most economists in the United States seem captivated by the spell of t  [#permalink]

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12 Aug 2018, 06:36
1. The primary purpose of the passage is to
(A) refute the theory that the free market plays a useful role in the development of industrialized societies the argument discusses whether price-fixing plays a useful role, not the free market
(B) suggest methods by which economists and members of the government of the United States can recognize and combat price-fixing by large firms superficial words match
(C) show that in industrialized societies price-fixing and the operation of the free market are not only compatible but also mutually beneficial
(D) explain the various ways in which industrialized societies can fix prices in order to stabilize the free market Consequently, nothing seems good or normal that does not accord with the requirements of the free market. - clearly no
(E) argue that price-fixing, in one form or another, is an inevitable part of and benefit to the economy of any industrialized society In fact, price-fixing is normal in all industrialized societies because the industrial system itself provides, as an effortless consequence of its own development, the price-fixing that it requires. <...> Were there something peculiarly efficient about the free market and inefficient about price-fixing, the countries that have avoided the first and used the second would have suffered drastically in their economic development. There is no indication that they have. - correct

2. The passage provides information that would answer which of the following questions about price-fixing?
I. What are some of the ways in which prices can be fixed? "Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products. Most economists do not see price-fixing when it occurs because they expect it to be brought about by a number of explicit agreements among large firms; it is not." AND "These economies employ intentional price-fixing, usually in an overt fashion. Formal price-fixing by cartel and informal price-fixing by agreements covering the members of an industry are commonplace."
II. For what products is price-fixing likely to be more profitable that the operation of the free market? not given
III. Is price-fixing more common in socialist industrialized societies or in non-socialist industrialized societies? it's described in both societies, but not stated in which price-fixing is more common
(A) I only
(B) III only
(C) I and II only
(D) II and III only
(E) I, II, and III

3. The author’s attitude toward “Most economists in the United States” (line 1) can best be described as
(A) spiteful and envious too negatively strong - unprofessional
(B) scornful and denunciatory too negatively strong - unprofessional
(C) critical and condescending correct - what's left
(D) ambivalent but deferential actually the author keeps one stance - they miss some aspects about price fixing (my mistake choosing this one)
(E) uncertain but interested the author seems to be certain by claiming that they miss some points about price fixing

4. It can be inferred from the author’s argument that a price fixed by the seller “seems pernicious” (line 7) because relevant text: Consequently, nothing seems good or normal that does not accord with the requirements of the free market. A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious.
(A) people do not have confidence in large firms not given
(B) people do not expect the government to regulate prices people's opinion is not given
(C) most economists believe that consumers as a group should determine prices correct
(D) most economists associate fixed prices with communist and socialist economies seems to be true but isn't correct to answer the question
(E) most economists believe that no one group should determine prices actual they believe that market price is solely established by consumers

5. The suggestion in the passage that price-fixing in industrialized societies is normal arises from the author’s statement that price-fixing is relevant text: In fact, price-fixing is normal in all industrialized societies because the industrial system itself provides, as an effortless consequence of its own development, the price-fixing that it requires.
(A) a profitable result of economic development
(B) an inevitable result of the industrial system correct - simply a paraphrase of the statements above
(C) the result of a number of carefully organized decisions
(D) a phenomenon common to industrialized and non-industrialized societies
(E) a phenomenon best achieved cooperatively by government and industry

6. According to the author, price-fixing in non-socialist countries is often These economies employ intentional price-fixing, usually in an overt fashion. Formal price-fixing by cartel and informal price-fixing by agreements covering the members of an industry are commonplace.
(A) accidental but productive it's mentioned that price-fizing is intentional
(B) illegal but useful the opposite is true - legal
(C) legal and innovative innovative - not sure
(D) traditional and rigid might be true, but not given explicitly

7. According to the author, what is the result of the Soviet Union’s change in economic policy in the 1970’s? relevant text: In the early 1970’s, the Soviet Union began to give firms and industries some of the flexibility in adjusting prices <...> Economists in the United States have hailed the change as a return to the free market. But <...>, Soviet firms have been given the power to fix prices.
(A) Soviet firms show greater profit.
(B) Soviet firms have less control over the free market. the opposite is true - they can fix prices
(D) Soviet firms have some authority to fix prices. correct
(E) Soviet firms are more responsive to the free market.

8. With which of the following statements regarding the behavior of large firms in industrialized societies would the author be most likely to agree?
(A) The directors of large firms will continue to anticipate the demand for products. the one that's left: demand is a factor that affect their choice not to increase or decrease the price too much; not sure about the relevant part of the passage for this one
(B) The directors of large firms are less interested in achieving a predictable level of profit than in achieving a large profit. profits are discussed
(C) The directors of large firms will strive to reduce the costs of their products. Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products.
(D) Many directors of large firms believe that the government should establish the prices that will be charged for products. unlikely because the firms operate in the free market; if anything the belief is not given
(E) Many directors of large firms believe that the price charged for products is likely to increase annually. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than its competitors charge <..> - so this answer is incorrect

9. In the passage, the author is primarily concerned with
(A) predicting the consequences of a practice
(B) criticizing a point of view the author gives reasons to believe that price-fixing is good and that most economist advocating the free market might be wrong in their disbelief in price-fixing
(C) calling attention to recent discoveries
(D) proposing a topic for research
(E) summarizing conflicting opinions
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28 Nov 2018, 03:56
Tough passage...

But what helped me was takign nearly 4minutes to read the passage! Some people may preffer to skim the passage, but I am more and more realizing that a good "careful" read pays of for me.

Took me ~11minutes to complete everything and got 8/9 correct
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13 Apr 2019, 21:57
AjiteshArun
I am facing problem in the primary purpose type Q. I was stuck between C and E.
Though I marked C, it seems wrong now because nothing about compatible and mutually benificial is discussed in the passage
In Q3 hows it C I am unable to understand
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28 Aug 2019, 03:11
pmenon wrote:
Most economists in the United States seem captivated by the spell of the free market. Consequently, nothing seems good or normal that does not accord with the requirements of the free market. A price that is determined by the seller or, for that matter, established by anyone other than the aggregate of consumers seems pernicious. Accordingly, it requires a major act of will to think of price-fixing (the determination of prices by the seller) as both “normal” and having a valuable economic function. In fact, price-fixing is normal in all industrialized societies because the industrial system itself provides, as an effortless consequence of its own development, the price-fixing that it requires. Modern industrial planning requires and rewards great size. Hence, a comparatively small number of large firms will be competing for the same group of consumers. That each large firm will act with consideration of its own needs and thus avoid selling its products for more than its competitors charge is commonly recognized by advocates of free-market economic theories. But each large firm will also act with full consideration of the needs that it has in common with the other large firms competing for the same customers. Each large firm will thus avoid significant price-cutting, because price-cutting would be prejudicial to the common interest in a stable demand for products. Most economists do not see price-fixing when it occurs because they expect it to be brought about by a number of explicit agreements among large firms; it is not.

Moreover, those economists who argue that allowing the free market to operate without interference is the most efficient method of establishing prices have not considered the economies of non-socialist countries other than the United states. These economies employ intentional price-fixing, usually in an overt fashion. Formal price-fixing by cartel and informal price-fixing by agreements covering the members of an industry are commonplace. Were there something peculiarly efficient about the free market and inefficient about price-fixing, the countries that have avoided the first and used the second would have suffered drastically in their economic development. There is no indication that they have.

Socialist industry also works within a framework of controlled prices. In the early 1970’s, the Soviet Union began to give firms and industries some of the flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the United States have hailed the change as a return to the free market. But Soviet firms are no more subject to prices established by a free market over which they exercise little influence than are capitalist firms; rather, Soviet firms have been given the power to fix prices.
1. The primary purpose of the passage is to

(A) refute the theory that the free market plays a useful role in the development of industrialized societies

(B) suggest methods by which economists and members of the government of the United States can recognize and combat price-fixing by large firms

(C) show that in industrialized societies price-fixing and the operation of the free market are not only compatible but also mutually beneficial

(D) explain the various ways in which industrialized societies can fix prices in order to stabilize the free market

(E) argue that price-fixing, in one form or another, is an inevitable part of and benefit to the economy of any industrialized society

Spoiler: :: OA
E

2. The passage provides information that would answer which of the following questions about price-fixing?

I. What are some of the ways in which prices can be fixed?
II. For what products is price-fixing likely to be more profitable that the operation of the free market?
III. Is price-fixing more common in socialist industrialized societies or in non-socialist industrialized societies?

(A) I only
(B) III only
(C) I and II only
(D) II and III only
(E) I, II, and III

Spoiler: :: OA
A

3. The author’s attitude toward “Most economists in the United States” (line 1) can best be described as

(A) spiteful and envious
(B) scornful and denunciatory
(C) critical and condescending
(D) ambivalent but deferential
(E) uncertain but interested

Spoiler: :: OA
C

4. It can be inferred from the author’s argument that a price fixed by the seller “seems pernicious” (line 7) because

(A) people do not have confidence in large firms
(B) people do not expect the government to regulate prices
(C) most economists believe that consumers as a group should determine prices
(D) most economists associate fixed prices with communist and socialist economies
(E) most economists believe that no one group should determine prices

Spoiler: :: OA
C

5. The suggestion in the passage that price-fixing in industrialized societies is normal arises from the author’s statement that price-fixing is

(A) a profitable result of economic development
(B) an inevitable result of the industrial system
(C) the result of a number of carefully organized decisions
(D) a phenomenon common to industrialized and non-industrialized societies
(E) a phenomenon best achieved cooperatively by government and industry

Spoiler: :: OA
B

6. According to the author, price-fixing in non-socialist countries is often

(A) accidental but productive
(B) illegal but useful
(C) legal and innovative

Spoiler: :: OA
E

7. According to the author, what is the result of the Soviet Union’s change in economic policy in the 1970’s?

(A) Soviet firms show greater profit.
(B) Soviet firms have less control over the free market.
(D) Soviet firms have some authority to fix prices.
(E) Soviet firms are more responsive to the free market.

Spoiler: :: OA
D

8. With which of the following statements regarding the behavior of large firms in industrialized societies would the author be most likely to agree?

(A) The directors of large firms will continue to anticipate the demand for products.

(B) The directors of large firms are less interested in achieving a predictable level of profit than in achieving a large profit.

(C) The directors of large firms will strive to reduce the costs of their products.

(D) Many directors of large firms believe that the government should establish the prices that will be charged for products.

(E) Many directors of large firms believe that the price charged for products is likely to increase annually.

Spoiler: :: OA
A

9. In the passage, the author is primarily concerned with

(A) predicting the consequences of a practice
(B) criticizing a point of view
(C) calling attention to recent discoveries
(D) proposing a topic for research
(E) summarizing conflicting opinions

Spoiler: :: OA
B

16 min.. 7 correct.. 2 wrong (8 and 9)

the paragraph says "common interest in a stable demand for products.".. in 8, Isn't option B better as it mentions predictability/ stability. anticipate a demand may not mean stability
Most economists in the United States seem captivated by the spell of t   [#permalink] 28 Aug 2019, 03:11
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