Passage 42

　　Excess inventory¹， a massive problem for many busi-nesses，has several causes，some of which are unavoidable.　Overstocks may accumulate through production overruns or errors. Certain styles and colors prove unpopular. With（5） some products-computers and software，toys，and books-last year‘s models are difficult to move even at huge discounts. Occasionally the competition introduces a　better product. But in many cases the public’s buying tastes simply change， leaving a manufacturer or distributor with（10 ）thousands （or millions）of items that the fickle² public no longer wants.
　　One common way to dispose of this merchandise is to sell it to a liquidator，who buys as cheaply as possible and　 then resells the merchandise through catalogs，discount（15）stores，and other outlets³. However，liquidators may pay less for the merchandise than it cost to make it. Another way to dispose of excess inventory is to dump it. The corporation takes a straight cost write-off on its taxes and hauls the merchandise to a landfill. Although it is hard to believe，（20） there is a sort of convoluted⁴ logic⁵ to this approach. It is perfectly⁶ legal， requires little time or preparation on the company‘s part， and solves the problem quickly. The draw-back is the remote possibility of getting caught by the news media. Dumping perfectly useful products can turn into a（25） public relations nightmare. Children living in poverty are freezing and XYZ Company has just sent 500 new snow-suits to the local dump. Parents of young children are barely getting by and QPS Company dumps 1，000 cases of disposable diapers because they have slight imperfections.
　　（30） The managers of these companies are not deliberately⁷ wasteful⁸； they are simply unaware⁹ of all their alternatives.　In 1976 the Internal Revenue Service provided a tangible¹⁰　incentive¹¹ for businesses to contribute their products to charity. The new tax law allowed corporations to deduct¹² the（35）cost of the product donated plus half the differencebetween cost and fair market selling price，with the proviso　that deductions¹⁴ cannot exceed twice cost. Thus， the federal government sanctions-indeed，encourages-an above-cost　federal tax deduction¹³ for companies that donate inventory to charity.

　　1. The author mentions each of the following as a cause of excess inventory EXCEPT
　　　（A） production of too much merchandise
　　　（B） inaccurate¹⁵ forecasting of buyers‘ preferences
　　　（C） unrealistic pricing policies
　　　（D） products‘ rapid obsolescence¹⁶
　　　（E） availability of a better product

　　2. The passage suggests that which of the following is a kind of product that a liquidator who sells to discount stores would be unlikely to wish to acquire？
　　　（A） Furniture
　　　（B） Computers
　　　（C） Kitchen equipment
　　　（D） Baby-care products
　　　（E） Children‘s clothing

　　3. The passage provides information that supports which of　the following statements？
　　　（A） Excess inventory results most often from insufficient¹⁷ market analysis by the manufacturer.
　　　（B） Products with slight manufacturing defects may contribute to excess inventory.
　　　（C） Few manufacturers have taken advantage of the changes in the federal tax laws.
　　　（D） Manufacturers who dump their excess inventory are often caught and exposed by the news media.
　　　（E） Most products available in discount stores have come from manufacturers‘ excess-inventory stock.

　　4. The author cites the examples in lines 25-29 most　probably in order to illustrate¹⁸
　　　（A） the fiscal¹⁹ irresponsibility of dumping as a policy for dealing²⁰ with excess inventory
　　　（B） the waste-management problems that dumping new products creates
　　　（C） the advantages to the manufacturer of dumping as a policy
　　　（D） alternatives to dumping explored by different companies
　　　（E） how the news media could portray²¹ dumping to the detriment²² of the manufacturer‘s reputation

　　5. By asserting that manufacturers “are simply unaware”（line 31），the author suggests which of the following？
　　　（A） Manufacturers might donate excess inventory to charity rather than dump it if they knew about the provision in the federal tax code.
　　　（B） The federal government has failed to provide sufficient encouragement to manufacturers to make use of advantageous²³ tax policies.
　　　（C） Manufacturers who choose to dump excess inventory are not aware of the possible effects on their reputation of media coverage²⁴ of such dumping.
　　　（D） The manufacturers of products disposed of by dumping are unaware of the needs of those people who would find the products useful.
　　　（E） The manufacturers who dump their excess inventory are not familiar with the employment of liquidators to dispose of overstock.

　　6. The information in the passage suggests that which of the following， if true，would make donating excess inv entory to charity less attractive to manufacturers than　 dumping？
　　　（A） The costs of getting the inventory to the charitable destination are greater than the above-cost tax deduction.
　　　（B） The news media give manufacturers‘ charitable contributions the same amount of coverage that they give dumping.
　　　（C） No straight-cost tax benefit can be claimed for items that are dumped.
　　　（D） The fair-market value of an item in excess inventory is 1.5 times its cost.
　　　（E） Items end up as excess inventory because of a change in the public‘s preferences.

　　7. Information in the passage suggests that one reason　manufacturers might take advantage of the tax provision　mentioned in the last paragraph is that
　　　（A） there are many kinds of products that cannot be legally dumped in a landfill
　　　（B） liquidators often refuse to handle products with slight imperfections
　　　（C） the law allows a deduction in excess of the cost of manufacturing the product
　　　（D） media coverage of contributions of excess-inventory products to charity is widespread and favorable
　　　（E） no tax deduction is available for products dumped or sold to a liquidator