Chapter 11

The Role of Government in Our Economy

Section 11.1

Government asRegulator

Read to Learn

Name four ways in which government regulates business.

The Main Idea

Our government’s role is to foster success in the economy. One way it does that is by creating rules and regulations that organizations and consumers must follow. Laws cover three aspects of the economy. They protect competition. They protect business agreements and creative properties. They are also used to regulate the production process.

Key Concept

How the Government Regulates Business

Key Term

interstatecommerce

intrastatecommerce

business that takes place between states

business that takes place within states

Key Term

monopoly

oligopoly

when a company controls an industry or is the only one to offer a product or service

when a small number of companies control an industry

Key Term

trust

antitrustlaws

a group of companies that band together to form a monopoly and cut out competition

laws that allow the federal government to break up monopolies, regulate them, or take control of them

Key Term

contract

breach ofcontract

a legally enforceable agreement between two or more parties

when one party fails to live up to the terms of a contract

Key Term

copyright

patent

the legal right of artists to own their creations

a legal grant for the sole right to own an invention

Key Term

trademarka name, a symbol, or a characteristic that identifies a product

How Government Regulates Business

The government is responsible for fostering economic success and protecting people by regulating businesses.

Graphic Organizer

FederalGovernment

StateGovernment

LocalGovernment

Country State CountiesTownships

CitiesTowns

Three Levels of Government

How Government Regulates Business

The federal government oversees interstate commerce.

interstate commercebusiness that takes place between states

How Government Regulates Business

The state government oversees intrastate commerce.

intrastate commercebusiness that takes place within states

Protecting Competition

When a monopoly or an oligopoly occurs, consumer choice is limited.

monopolywhen a company controls an industry or is he only one to offer a product or serviceoligopolywhen a small number of companies control an industry

Monopoly, the BoardGame

Lizzie Magie, a young Quaker woman from Virginia, created a game that became Monopoly® in 1903.

It was developed as a way to teach people about the monopoly of land ownership.

Protecting Competition

Companies can form a monopoly by establishing a trust.

trusta group of companies that band together to form a monopoly and cut out competition

Protecting Competition

The U.S. government formed the Federal Trade Commission (FTC) to enforce antitrust laws and regulate interstate trade.

antitrust lawslaws that allow the federal government to break up monopolies

Protecting Business Agreements

A contract can be written, verbal, or formed over a handshake.

contracta legally enforceable agreement between two or more parties

Protecting Business Agreements

It is easier to prove a breach of contract occurred if there is a written contract.

breach of contractwhen one party fails to live up to the terms of a contract

Protecting Creative Properties

A person creating an original work automatically holds the copyright to it, which lasts until 70 years after the owner’s death.

copyrightthe legal right of artists to own their creations

Protecting Creative Properties

A patent lasts for 20 years after the inventor filed his or her application with the U.S. Patent and Trademark Office.

patenta legal grant for the sole right to own an invention

Protecting Creative Properties

A trademark is protected from being copied if it is registered appropriately.

trademarka name, symbol, or characteristic that identifies a product

Regulating the Production Process

The government regulates the production process by passing laws that protect the environment and workers.

Regulating the Production Process

The Food and Drug Administration (FDA) regulates the manufacture and sale of drugs in the United States.

You own a clothing shop in a state that has a low sales tax; neighboring states have a higher sales tax. When an out-of-state customer buys clothing at your shop, you do not add any tax. Many out-of-staters shop at your store and you do not know if they pay the tax they are supposed to pay.

Decision Making Is it appropriate for you to advertise your shop in nearby out-of state towns? Explain your answer.

Answer

Students might suggest that it is not appropriate to appear to be promoting tax avoidance. However, advertising your shop’s goods and services is appropriate, even if the area encompasses more than one state.

1. What is the difference between interstate and intrastate commerce?

Interstate commerce is business between states, overseen by the federal government. Intrastate commerce is business within a state, overseen by state or local governments.

2. What are the ways that the government can deal with a monopoly?

It can break it up, regulate it, or take it over.

3. What kinds of property are protected by copyrights?

musical compositions, song lyrics, books, movies, plays, and photographs

Chapter 11

The Role of Government in Our Economy

Section 11.1

Government asRegulator

End of