COMPETITION IN THE

MARKETPLACE

BUYERS & SELLERS

BUYERS = CONSUMERS

SELLERS = PRODUCERS

BUYERS & SELLERS COME TOGETHER TO EXCHANGE THINGS OF VALUE

Market StructureCompetition

The rivalry between sellers to attract customers while lowering costs

Cooperationthe combination of persons for purposes of production, purchase, or distribution for their joint benefit

MONOPOLYONLY ONE PRODUCER

NO COMPETITON

CHARGE HIGHER PRICESPRODUCE LESSPROVIDE LESS QUALITY (WHY?)

What is an example of a current monopoly?

OLIGOPOLYOnly a few producers

Operate between competitive markets and monopolies

Examples: Utilities (what are they?)

CONGLOMERATES

Large Companies that combine to form larger companies

Example: General Electric (GE) – They own NBC, financial services and health care services

MULTINATIONAL CONGLOMERATE

companies that operate their business in more than one country.

Example: BP (British Petroleum)

Global Economy

Global Developments

Protectionism – idea that a country wants to prevent free trade to safeguard the jobs, and the overall economy.

Developed Country – a country which is highly industrialized, with high levels of technology, and a large middle class.

Developing Country – a country which is transitioning from a more traditional economy to an industrialized nation. There are various levels of developing nations.

INTERNATIONAL TRADE

Comparative advantage – ability of one country to produce a product at a lower opportunity cost than another country.

Favorable balance of trade – a country exports more than they import. Foreign trade is profitable to the nation.

Unfavorable balance of trade – a country imports more than they export. Foreign trade loses money for the nation.

United Nations Internationalism – nations should cooperate to

promote common aims, such as supporting economic development and fighting terrorism.

Goals of the United Nations Promote peace Provide aid to nations Promote & Protect Democratic Elections Prevent Violence Provide aid to Refugees

Globalization Interdependence and interaction among individuals

and nations working across barriers of distance, culture, and technology.

Global Issues

1) Environmental Destruction 2) Economic Inequality

Human Rights

Declaration of Human Rights

1) Protection of Rights Similar to US Bill of Rights Additions – freedom of movement, right to asylum,

right to nationality, right marry/family, own property

2) Raising Standards of Living Includes - right to security, right to work, equal pay for

equal work, right to form and join trade unions. Additions – standard of living acceptable for health and

well-being, right to education

Human Rights Violations

1) Genocide – deliberate killing of members of a racial or cultural group. (Nazi Germany, Rwanda)

2) Apartheid – separating people based on race or ethnicity. (South Africa, Similar Issues in Southern United States – Jim Crow Laws)

Trade Barriers

A means of preventing foreign goods from freely entering a nations economy

These are usually used to protect the nations industry from outside competition

Tariffs

Is a tax on imported goods (ex. There is a tax on imported steel)

Import Quotas

A limit on the amount of a good that can be imported

TRADE BARRIERS

Embargo – a refusal to trade with another country.

Trade Cartel – a group of nations band together to control the supply & price of a product. (OPEC)

OPEC COUNTRIES

Global DevelopmentsArguments for Supporting Development

1) Higher per capita GDP.

2) Opens markets to sell goods and services.

3) Promotes democracy.

Issues for Supporting Development

1) Environmental protection.

2) Protection of Domestic Jobs.

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World Bank

Provides development assistance to developing nations

Offers loans, advice, and resources

International Monetary Fund

Developed to help stabilize a nations economy

Struggling nations are allowed to lengthen the time they have to pay back loans if they meet certain conditions that the IMF says will help to stabilize their economy

Foreign aid

Money given to nations to help with industrialization, disaster relief, and economic growth

Free tradeThe idea that nations should not have

trade barriers

Arguments Against Free Trade

1. Job security is threatened.2. Protection of nation’s

economic security is needed.

3. Protection of infant industries is needed.

OPEC COUNTRIES

Arguments For Free Trade

1. Increased competition = improved products.

2. Trade restrictions damage export industries.

3. Specialization and comparative advantage lowers prices.

4. Greater political cooperation.

Free Trade Agreements

NAFTA: North American Free Trade Agreement

Is a treaty signed by Mexico, Canada, and the United States that will get rid of import tariffs on most products over the next fifteen years

Allows for the free flow of trucks to and from all three nations

CAFTA – Central American Free Trade Agreement

Between US, Central American Countries

WTO: World Trade Organization

world wide organization whose goal to encourage free trade

Helps negotiate new trade agreements and settle disputes between countries

European Union

A regional trade agreement of many European nations

The agreement has freed trade in many European nations and has allowed workers to move between nations

Adoption of one currency, the Euro, has made the EU a powerful economic force