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Microeconomics

Microeconomics. Section 3 the Role of Government Terms:. Trust 178 legally formed combinations of companies or corporations. US government, since late 1800s, has restricted them. “inadequate competition”. Price discrimination.

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Microeconomics

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  1. Microeconomics

  2. Section 3 the Role of Government Terms: • Trust • 178 legally formed combinations of companies or corporations. • US government, since late 1800s, has restricted them. • “inadequate competition”

  3. Price discrimination • 179 the practice by a business of charging customers different prices for the same product. • Also illegal in US.

  4. Cease and desist order • 179 Federal Trade Commission (FTC) ruling requiring: • A company to stop an unfair business practice that reduces or limits competition among firms • Ex. Price fixing

  5. Public disclosure • 181 The requirement that businesses reveal information important to the public. • content/ingredient/safe use labels for consumers • Financial/operating information for investors • EDGAR • Banks must report to Federal Reserve System/FDIC • Credit terms • Credit reports • Truth in advertising

  6. Hwk Assessments, Class Work, to Know

  7. Assessments: Checking for Understanding • 1 • To encourage competition, • Regulate monopolies • Punish companies when they act in a manner that restrains competition

  8. 3 • Sherman Antitrust Act, 1890 • To protect trade and commerce against unlawful restraint and monopoly • Clayton Antitrust Act, 1914 • Greater government power against monopolies • Outlawed price discrimination • Federal Trade Commission Act, 1914 • Group to enforce the Clayton Act • Issue cease and desist orders • Robinson-Patman Act 1936 • Companies can no longer offer special discounts to some customers while denying them to others.

  9. 4 • To prevent market failures due to negative externalities, and • to regulate natural and government monopolies.

  10. 5 • It promotes competition • Enables consumers to make informed decisions

  11. 6 • People carry on economic affairs freely but are subject to some government regulation.

  12. WE Image, p. 179 • Question • To ensure fair methods of competition in interstate commerce.

  13. WE Image, p. 180 • Questions • Answers will vary. • Most likely: • FDA, food/drug quality/safety • FTC, fair prices • NLRB, worker rights • EEOC, worker rights • EPA, health/environment safety • OSHA, worker safety • CPSC, consumer safety • Which would be involved in an automobile recall? • CPSC

  14. WE Image, p. 181 • Question • 40 cents • What will the producer probably do? • Pass the cost on to the middlemen, who will sell eventually to the consumer to get some of the money back.

  15. WE Image, p. 182 • Question • Promote competition • Enable consumers to make better decisions

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