Four legal approaches may be followed in
attemptingto channel technological development
in socially useful directions: specific directives,
market incentive modifications, criminal prohi
(5) bitions, 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
(10) 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
(15)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
(20) 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
(25) activity in areas impinging on fundament
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
(30) 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
(35) 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
(40) 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
(45) 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
(50) 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
(55) external costs on all those exposes 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 nonopti
(60) mal 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
(65) situation, thus giving an optimal allocation
of resources at a given time.
17. The passage is primarily concerned with describing
(A) objectives and legal methods 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 technological development in light of environmentalist objections
(E) technological innovations making it possible to achieve optimum allocation of resources
18. 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
19. 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
20. 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
21. 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
22. 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.
23. 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 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
24. 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 effects of technological development cannot be controlled.
(C) Some technological developments are beneficial.
(D) The current states of technological development results in a good allocation of resources.
(E) Applications of technological development are criminally destructive. |
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