Chapter 11
The Role of Government
in Business
pp. 160-173
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Chapter 11
Learning Objectives
After completing this chapter, you’ll be
able to:
1. Describe ways government protects
business.
2. Name some of the services the
government provides.
continued
Introduction to Business, The Role of Government in Business
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Chapter 11
Learning Objectives
After completing this chapter, you’ll be
able to:
3. Explain why the government collects
taxes.
4. State the ways the government
promotes business.
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Chapter 11
Why It’s Important
Government rules promote and
regulate the actions of business.
The laws influence the production,
selling, and pricing of goods and
services.
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Chapter 11
Key Words
interstate commerce
intrastate commerce
oligopoly
monopoly
trust
antitrust laws
contract
Introduction to Business, The Role of Government in Business
continued
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Chapter 11
Key Words
breach of contract
copyright
patent
trademark
revenue
subsidies
tax incentives
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Chapter 11
How Government Affects
Business
To promote economic growth, local,
state, and national governments pass
laws to both promote and regulate
business.
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Chapter 11
Government as Regulator
The three different levels of
government are:
• Federal
• State
• Local
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Chapter 11
Government as Regulator
The federal government focuses on
business that takes place across all
states, or interstate commerce.
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Chapter 11
Government as Regulator
State governments focus on
intrastate commerce, or business
within each state.
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Chapter 11
Government as Regulator
The four aspects of the economy that
the government regulates are:
1.
2.
3.
4.
Protecting competition
Protecting business agreements
Protecting creative properties
Regulating the production process
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Chapter 11
Figure
11.1
GOVERNMENT REGULATIONS
Government
regulates these
four aspects of the
economy.
Which one do you
think has side
effects on our
environment?
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Chapter 11
Protecting Competition
An oligopoly is when a small number
of companies control the market
without actually forming a trust.
A company that controls an entire
industry is called a monopoly.
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Chapter 11
Protecting Competition
Rival companies can form a monopoly
by banding together into a trust and
agreeing not to compete with each
other.
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Chapter 11
Protecting Competition
Antitrust laws allow the government
to break up monopolies, regulate
them, or take them over.
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Chapter 11
Protecting Competition
The government created the Federal
Trade Commission (FTC) to regulate
interstate trade.
Its job includes setting standards for
honest advertising.
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Chapter 11
Limits on Competition
The merger between America Online (AOL)
and Time Warner is the largest media merger
in history. The new company was worth $110
billion, after the merger.
continued
Introduction to Business, The Role of Government in Business
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Chapter 11
Limits on Competition
The Federal Trade Commission was concerned
that the new AOL-Time Warner would limit
competition. To avoid this, they required Time
Warner to open its broadband pipes to
competing Internet service providers.
continued
Introduction to Business, The Role of Government in Business
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Chapter 11
Analyze
What are the advantages of the AOL and Time
Warner merger?
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Chapter 11
Protecting Business Agreements
One of the most basic ways the
government protects business is by
enforcing contracts.
A contract is a legal agreement
between two or more parties to
conduct business.
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Chapter 11
Protecting Business Agreements
A contract can be written, verbal, or
even done with a handshake.
A contract protects all the parties that
agree to it.
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Chapter 11
Protecting Business Agreements
When one party fails to live up to the
terms of a contract it is called a
breach of contract.
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Chapter 11
Protecting Creative Properties
A copyright gives artists the sole right
to own their creations, such as plays,
photos, music, paintings, and books.
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Chapter 11
Protecting Creative Properties
A patent gives you the sole right to
own an invention.
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Chapter 11
Protecting Creative Properties
A trademark is a brand name, trade
name, trade characteristic, or a
combination of these that is given legal
protection by the federal government.
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Chapter 11
Regulating the Production
Process
The government tries to stop industrial
pollutants with regulations.
These regulations limit the amount of
wastes that factories can discharge
into the environment.
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Chapter 11
Fast Review
1. What is the difference between
interstate and intrastate commerce?
2. What are the ways the government
can deal with a monopoly?
continued
Introduction to Business, The Role of Government in Business
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Chapter 11
Fast Review
3. What kinds of properties are
protected by copyrights?
4. Explain the role of the legal system
in business.
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Chapter 11
Government as Provider
People pay for government-provided
goods and services through taxes.
The idea behind taxes is to pay for
public goods and services and to
share the cost among many people.
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Chapter 11
Figure
11.2
WORKING FOR TAXES
During an average eight-hour workday, nearly three hours of your
workday goes to paying federal, state, and local taxes. This
comparative chart shows where people work the most and least
for taxes.
Name some ways in which the government spends the money for
projects or services on your community.
Source: Tax Foundation
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Chapter 11
Government as Provider
Government spending decisions
directly affect how resources are
allocated.
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Chapter 11
Government as Provider
Government spending influences the
distribution of income, or the way in
which income is allocated among
families, individuals, or other
designated groups in the economy.
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Chapter 11
Providing Public Services
The government is the single largest
provider of services in the country.
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Chapter 11
Providing Public Services
Many of the services the government
provides are necessary for the
protection of the public.
Other services promote social welfare.
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Chapter 11
Providing Public Services
The government also provides public
education, roads, courts, post offices,
and many more.
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Chapter 11
Providing Public Services
To pay for services, the government
has to raise money.
The money the government takes in is
called revenue.
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Chapter 11
Providing Public Services
Federal income tax is used to pay for
highways, defense, and social security.
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Chapter 11
Providing Public Services
Local taxes are used to pay for streets,
libraries, and parks.
All three levels of government fund
public education.
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Graphic Organizer
Chapter 11
OrganizerProvides
ServicesGraphic
the Government
PUBLIC
SAFETY
PUBLIC
TRANSIT
PARKS AND
RECREATION
COURT
SYSTEM
GOVERNMENT
SERVICES
POSTAL
SERVICES
PUBLIC
EDUCATION
WELFARE
SUBSIDIES
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Chapter 11
Providing Work
The government is the single largest
employer in the country.
The federal government employs over
three million people.
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Chapter 11
Providing Work
For people temporarily out of work, the
government provides unemployment
insurance.
It also provides welfare benefits and
job training programs.
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Chapter 11
Assisting Business
The government is the single largest
consumer of goods and services.
The government buys most of its
equipment directly from businesses or
has it specially made, such as military
aircraft and fire trucks.
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Chapter 11
Assisting Business
The Small Business Administration
(SBA) offers different kinds of loans to
aspiring small-business owners.
The government also lends money to
big businesses that are in financial
trouble.
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Chapter 11
Assisting Business
To protect American businesses from
unfair foreign competition, the
government sets up trade barriers.
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Chapter 11
Assisting Business
Subsidies are payments the
government gives to businesses to
make up for their losses.
Introduction to Business, The Role of Government in Business
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Chapter 11
Assisting Business
To encourage socially responsible
behavior, the government offers
businesses reductions in taxes, or tax
incentives.
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Chapter 11
Assisting Business
Tax breaks are given to companies
that conserve energy or use alternate
sources of fuel.
Loans and tax breaks are offered to
businesses that do community
development.
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Chapter 11
Fast Review
1. What are some services the
government provides for the
public?
2. Name different types of
government workers.
Introduction to Business, The Role of Government in Business
continued
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Chapter 11
Fast Review
3. Describe the types of activities
performed by government in
business.
Introduction to Business, The Role of Government in Business
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Chapter 11
Name some roadways or highways
in your community that need work.
Does the city have any plans to
repair them?
continued
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Chapter 11
Name the issues your local board
of education recently passed. What
did they want to spend money on?
continued
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Chapter 11
Has your family ever bought a
product that was recalled by the
manufacturer because it didn’t
meet government regulations?
What was it?
continued
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Chapter 11
What is the amount of state tax you
pay for clothing or food?
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End of
Chapter 11
The Role of Government
in Business
pp. 160-173
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