Reading Comprehension - Passage #9

Saturday, December 23, 2006

Direction: The passage is followed by questions based on its content. After reading the passage, choose the best answer to each question.

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" 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" 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

Note: Post your answers along with explanations if required. Highlight this note to check your answers. Answers: 1-E, 2-A, 3-C, 4-C, 5-B, 6-E, 7-D, 8-A, 9-B.

Difficult Words:
Free market - A market where the price of each item or service is arranged by the mutual consent of sellers and buyers
Pernicious - exceedingly dangerous; damaging

Proposed "Table of Contents"

Monday, December 11, 2006

All New Table Of Contents. This new TOC will be implemented soon for 2007 entrance tests preparation.

Section I - Quantitative Aptitude - Arithmetic & Algebra

1. Numbers
   1. Number System
   2. Classification of Numbers
   3. Properties of Numbers
   4. Base System & Base Conversion
   5. Absolute Value
   6. Basic Arithmetic Operations
   7. VBODMAS Rule
2. Symbol Based Problems
3. Divisibility Test
   1. HCF & LCM
   2. HCF & LCM of Integers
   3. HCF & LCM of Fractions & Decimal numbers
4. Surds and Indices
   1. Square numbers
   2. Square roots & Cube roots
   3. Laws of Indices
   4. Rule of cyclicity
   5. Laws of surds
5. Averages
   1. Types of averages
   2. Arithmetic mean
   3. Geometric mean
   4. Harmonic mean
   5. Relation between the three means i.e AM, GM, HM
6. Percentages
   1. Definition of percentage
   2. Application involving percentage
7. Stocks and Shares
8. Simple & Compound Interest
   1. SI & CI
   2. Population & Depreciation
9. Profit & Loss
   1. Basic terminology in Profit & Loss
   2. Important formulae in Profit & Loss
10. Basic Algebraic Operations
    1. Basic concepts of Algebra
    2. Arithmetic operations on algebraic expressions
11. Algebraic formula and their applications
    1. Important algebraic formulae
    2. HCF & LCM of polynomials
12. Simple Equations
    1. Framing a simple equation
    2. Conversion of verbal statements to simple equation
13. Simultaneous Equations
    1. Simultaneous equations
    2. General method of solving simultaneous equations
14. Quadratic Equations
    1. Definition of a quadratic equation
    2. Roots of a quadratic equation
    3. Relation between roots and coefficients
    4. Nature of the roots of a quadratic equation
    5. Equation reducible to quadratic equation
15. Inequations
    1. Definition of an inequation
    2. Properties of inequalities
    3. Quadratic inequalities
16. Ratio, Proportion & Variation
    1. Definition of a ratio
    2. Composition of ratios
    3. Order of ratios
    4. Properties of ratios
    5. Definition of proportion
    6. Continued proportion
    7. Variation
    8. Important results of proportion
17. Partnership
    1. Definition of partnership
    2. Simple & Compound Partnership
18. Mixtures & Alligations
    1. Types of mixtures
    2. Alligation Rule
    3. Important results based on Alligation rule
19. Time, Speed & Distance
    1. Definition of speed
    2. Average speed & proportion related to Average speed
    3. Relative speed & proportion related to Relative speed
20. Races
    1. Basic terminology in races
    2. Important formulae related to races
21. Work
    1. Definition of work
    2. Important formulae for work related problems
22. Pipes & Cisterns
23. Calendar
24. Clocks

Section II - Verbal Ability & Verbal Reasoning

1. Intro - Sentence, Subject & Predicate
2. Parts of Speech and Articles
   1. Basics
   2. Noun
   3. Pronoun
   4. Adjective
   5. Verb
   6. Adverb
   7. Conjunction
   8. Preposition
   9. Interjection.
3. Clauses, Idoms and Phrasal Verbs
   1. Phrases
   2. Clauses
   3. Idioms
   4. Phrasal Verbs.
4. Common Errors
   1. Pronoun Antecedent Agreement
   2. Verb Tense Match
   3. Parallel Construction
   4. Misplaced Modifier
   5. Dangling Modifier
   6. Subject Verb Agreement
   7. Prepositional Usage
   8. Correct Adjectival Usage
   9. Correct Usage of Articles
   10. Sentence Correction.
5. Jumbled Paragraphs and Sentence Patterns
6. Fill in the Blanks
   1. Logical Fill In the Blanks
   2. Paired Logical Fill in the Blanks
   3. Missing Link in a Paragraph
   4. Complete the theme
   5. Word repeated Maximum Number of Times
7. Critical Reasoning
   1. Premise
   2. Assumption
   3. Conclusion
   4. Inference
   5. Structure
8. Odd Man Out, Analogies and Multiple Usage
9. Summary
10. Venn Diagrams and Syllogisms
    1. Venn Diagrams
    2. Syllogisms
11. Definition Based Questions
    1. Argument
    2. Assertion and Counter-argument
    3. Conclusions and Implicit Statements
    4. Fact
    5. Inference
    6. Judgment
       
    7. Probably True/False
    8. Definitely True/False
    9. Strong Argument
    10. Weak Argument

This list will be soon update. Keep Visiting!