Short Passages Comprehension - XIII

Please study carefully the comprehension given below. The passages is followed by a set of questions choose the best answer to each question.

Globalisation, liberalisation and free market are some of the most significant modern trends in economy. Most economists in our country 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 the 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 as both normal and having a valuable economic function, In fact, price fixing is normal in all industrialised 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 products for more than its competitors charge is commonly recognised 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 will 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 economics of non-socialist countries. Most of 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 common place.
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 flexibility in adjusting prices that a more informal evolution has accorded the capitalist system. Economists in the USA have hailed the change as a return to the free-market.
But the then Soviet firms were not in favour of the prices established by a free-market over which they exercised little influence; rather, Soviet firms acquired some power to fix prices.

Ques 1. The author’s primary objective of writing the passage seems to :
(a) belie the popular belief that the free market helps enhance development of industrial societies
(b) advocate that price-fixing is unavoidable and it is beneficial to the economy of any industrialised society
(c) explain the methodology of fixing price to stabilise free-market
(d) prove that price-fixing and free market are compatible and mutually beneficial to industrialised societies
(e) create awareness among the general public regarding combating price-fixing by large firms

Ques 2. Which of the following statements (1), (2) and/or (3) is/are true in the context of the information given in the passage?
The information in the passage is helpful to :
(1) know some of the ways in which prices can be fixed
(2) identify the products for which price-fixing can be more beneficial
(3) differentiate between the economies of various countries
(a) Only 1
(b) Only 2
(c) Only 3
(d) 1 and 2
(e) None of these

Ques 3. Considering the literal meaning and connotations of the words used in the passage, the author’s attitude towards ‘most economists’ can best be described as :
(a) derogatory and antagonistic
(b) impartial and unbiased
(c) spiteful and envious
(d) critical and condescending
(e) indifferent

Ques 4. The author feels that price fixed by seller seems pernicious because :
(a) people don’t have faith in large firms
(b) people don’t want the Government to fix prices
(c) most economists believer that consumers should determine prices
(d) most economists believe that no one group should determine prices
(e) people do not want to decide prices

Ques 5. Which of the following statements is definitely true in the context of the passage? Price fixing is :
(a) a profitable result of economic development
(b) an inevitable result of the industrial system
(c) the joint result of a number of carefully organised decisions
(d) a phenomenon uncommon to industrialised societies
(e) a result of joint venture of the Government and industry

Ques 6. According to the passage, price fixing in non-socialistic is generally :
(a) intentional and widespread
(b) illegitimate but beneficial
(c) conservative and inflexible
(d) legitimate and innovative
(e) conservative and scarce

Ques 7. What was the result of the then Soviet Union’s change in economic policy in the 1970’s?
(a) They showed greater profits
(b) They had less control over the free-market
(c) They were able to adjust to techno advancement
(d) They acquired some authority to fix prices
(e) They became more responsive to free market

Ques 8. The author’s primary concern seems to
(a) summarise conflicting viewpoints
(b) make people aware of recent discoveries
(c) criticise a point of view
(d) predict the probable results of a practice
(e) prepare a research proposal

Ques 9. Which of the following statements about the socialist industry is/are false?
(1) It works under certain price restrictions
(2) It has no authority to determine price
(3) It hails the strategy of price fixing, as a major deviation
(a) Only 1 is false
(b) Only 2 is false
(c) Only 3 is false
(d) 1 and 2 are false
(e) 2 and 3 are false

Answers :
(1) (b), (2) (a), (3) (b), (4) (c), (5) (b), (6) (a), (7) (e), (8) (a), (9) (c).