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
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
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
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
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
(D) traditional and rigid
(E) intentional and widespread
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.
(C) Soviet firms are able to adjust to technological advances.
(D) Soviet firms have some authority to fix prices.
(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.
(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.
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
Caffeine, the stimulant in coffee, has been called “the most widely used psychoactive substance on Earth.” Snyder, Daly and Bruns have recently proposed that caffeine affect behavior by countering the activity in the human brain of a naturally occurring chemical called adenosine. Adenosine normally depresses neuron firing in many areas of the brain. It apparently does this by inhibiting the release of neurotransmitters, chemicals that carry nerve impulses from one neuron to the next. Like many other agents that affect neuron firing, adenosine must first bind to specific receptors on neuronal membranes. There are at least two classes of these receptors, which have been designated A1 and A2. Snyder et al propose that caffeine, which is structurally similar to adenosine, is able to bind to both types of receptors, which prevents adenosine from attaching there and allows the neurons to fire more readily than they otherwise would.
For many years, caffeine’s effects have been attributed to its inhibition of the production of phosphodiesterase, an enzyme that breaks down the chemical called cyclic AMP. A number of neurotransmitters exert their effects by first increasing cyclic AMP concentrations in target neurons. Therefore, prolonged periods at the elevated concentrations, as might be brought about by a phosphodiesterase inhibitor, could lead to a greater amount of neuron firing and, consequently, to behavioral stimulation. But Snyder et al point out that the caffeine concentrations needed to inhibit the production of phosphodiesterase in the brain are much higher than those that produce stimulation. Moreover, other compounds that block phosphodiesterase’s activity are not stimulants.
To buttress their case that caffeine acts instead by preventing adenosine binding, Snyder et al compared the stimulatory effects of a series of caffeine derivatives with their ability to dislodge adenosine from its receptors in the brains of mice. “In general,” they reported, “the ability of the compounds to compete at the receptors correlates with their ability to stimulate locomotion in the mouse; i.e., the higher their capacity to bind at the receptors, the higher their ability to stimulate locomotion.” Theophylline, a close structural relative of caffeine and the major stimulant in tea, was one of the most effective compounds in both regards.
There were some apparent exceptions to the general correlation observed between adenosine-receptor binding and stimulation. One of these was a compound called 3-isobutyl-1-methylxanthine (IBMX), which bound very well but actually depressed mouse locomotion. Snyder et al suggests that this is not a major stumbling block to their hypothesis. The problem is that the compound has mixed effects in the brain, a not unusual occurrence with psychoactive drugs. Even caffeine, which is generally known only for its stimulatory effects, displays this property, depressing mouse locomotion at very low concentrations and stimulating it at higher ones.
1. The primary purpose of the passage is to
(A) discuss a plan for investigation of a phenomenon that is not yet fully understood
(B) present two explanations of a phenomenon and reconcile the differences between them
(C) summarize two theories and suggest a third theory that overcomes the problems encountered in the first two
(D) describe an alternative hypothesis and provide evidence and arguments that support it
(E) challenge the validity of a theory by exposing the inconsistencies and contradictions in it
2. Which of the following, if true, would most weaken the theory proposed by Snyder et al?
(A) At very low concentrations in the human brain, both caffeine and theophylline tend to have depressive rather than stimulatory effects on human behavior.
(B) The ability of caffeine derivatives at very low concentrations to dislodge adenosine from its receptors in mouse brains correlates well with their ability to stimulate mouse locomotion at these low concentrations.
(C) The concentration of cyclic AMP in target neurons in the human brain that leads to increased neuron firing can be produced by several different phosphodiesterase inhibitors in addition to caffeine.
(D) The concentration of caffeine required to dislodge adenosine from its receptors in the human brain is much greater than the concentration that produces behavioral stimulation in humans.
(E) The concentration of IBMX required to dislodge adenosine from its receptors in mouse brains is much smaller than the concentration that stimulates locomotion in the mouse.
3. According so Snyder et al, caffeine differs from adenosine in that caffeine
(A) stimulates behavior in the mouse and in humans, whereas adenosine stimulates behavior in humans only
(B) has mixed effects in the brain, whereas adenosine has only a stimulatory effect
(C) increases cyclic AMP concentrations in target neurons, whereas adenosine decreases such concentrations
(D) permits release of neurotransmitters when it is bound to adenosine receptors, whereas adenosine inhibits such release
(E) inhibits both neuron firing and the production of phosphodiesterase when there is a sufficient concentration in the brain, whereas adenosine inhibits only neuron firing
4. In response to experimental results concerning IBMX, Snyder et al contended that it is not uncommon for psychoactive drugs to have
(A) mixed effects in the brain
(B) inhibitory effects on enzymes in the brain
(C) close structural relationships with caffeine
(D) depressive effects on mouse locomotion
(E) the ability to dislodge caffeine from receptors in the brain
5. The passage suggests that Snyder et al believe that if the older theory concerning caffeine’s effects were correct, which of the following would have to be the case?
I. All neurotransmitters would increase the short-term concentration of cyclic AMP in target neurons.
II. Substances other than caffeine that inhibit the production of phosphodiesterase would be stimulants.
III. All concentration levels of caffeine that are high enough to produce stimulation would also inhibit the production of phosphodiesterase.
(A) I only
(B) I and II only
(C) I and III only
(D) II and III only
(E) I, II, and III
6. According to Snyder et al, all of the following compounds can bind to specific receptors in the brain EXCEPT
7. Snyder et al suggest that caffeine’s ability to bind to A1 and A2 receptors can be at least partially attributed to which of the following?
(A) The chemical relationship between caffeine and phosphodiesterase
(B) The structural relationship between caffeine and adenosine
(C) The structural similarity between caffeine and neurotransmitters
(D) The ability of caffeine to stimulate behavior
(E) The natural occurrence of caffeine and adenosine in the brain
8. The author quotes Snyder et al in lines 38-43 most probably in order to
(A) reveal some of the assumptions underlying their theory
(B) summarize a major finding of their experiments
(C) point out that their experiments were limited to the mouse
(D) indicate that their experiments resulted only in general correlations
(E) refute the objections made by supporters of the older theory
9. The last paragraph of the passage performs which of the following functions?
(A) Describes a disconfirming experimental result and reports the explanation given by Snyder et al in an attempt to reconcile this result with their theory.
(B) Specifies the basis for the correlation observed by Snyder et al and presents an explanation in an attempt to make the correlation consistent with the operation of psychoactive drugs other than caffeine.
(C) Elaborates the description of the correlation observed by Snyder et al and suggests an additional explanation in an attempt to make the correlation consistent with the older theory.
(D) Reports inconsistent experimental data and describes the method Snyder et al will use to reanalyze this data.
(E) Provides an example of the hypothesis proposed by Snyder et al and relates this example to caffeine’s properties.
*Note:- Check the answers of above RC passages