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resent to produce eruptive phenomena. (A) I only (B) II only (C) I and II only (D) II and III only(A) (E) I, II, and III 27. Which of the following would be the most appropriate title for the passage? (A) Energy from Water Sources: The Feasibility of Commercial Systems (B) Geothermal Energy Retrieval: Volcanic Activity and Hot Dry Rocks (C) Energy Underground: Geothermal Sources Give Way to Fossil Fuels (D) Tappable Energy for America’s Future: Hot Dry Rocks(D) (E) High Geothermal Gradients in the United States: Myth or Reality? SECTION B Four legal approaches may be followed in attempting to channel technological development in socially useful direction: specific directives, market incentive modifications, criminal prohibitions, and changes in decisionmaking structures. Specific directives involve the government’s identifying one or more factors controlling research, development, or implementation of a given technology. Directives affecting such 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 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 to sue to prevent certain technological development, or easing procedural rules to enable the recovery of damages to pensate for harm caused by destructive technological activity. Criminal prohibitions may modify technological activity in areas impinging on fundamental 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 vehicle performance. Alteration of decisionmaking structures includes all possible modifications in the authority, constitution, or responsibility of private and public entities deciding questions of technological development and implementation. Such alterations include the addition of publicinterest members to corporate boards, the imposition by statute of duties on governmental decisionmakers, and the extension of warranties in response to consumer 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 allocation, that bination 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 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 external costs on all those exposed 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, mon to all. Such externalities lead to nonoptimal 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 situation, thus giving an optimal allocation of resources at a given time. 17. The passage is primarily concerned with describing (A) objectives and legal method 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 the technological development in light of environmentalist objections(A) (E) technological innovations making it possible to achieve optimum allocation of resources 18. The author cites air pollution from motor vehicles in lines 5456 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 buyerseller bargains (D) refute hypotheses not made on the basis of monetary exchange values(C) (E) mend technological research undertaken for the mon 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 everincreasing resource costs (C) reflect an optimal allocation of natural resources (D) enpass more than the effects on the buyers and sellers alone(D) (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) (E) Causing technological development to cease 21. A gasolineconservation 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 decisionmaking structure(B) (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 technologycontrol methods would be effective. (B) Some resource allocations would be illegal. (C) Prices would include all costs to members of society. (D) Some decisionmakin