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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