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Introduction to Business Ch 9: Government in Our Economy Our Government • Main Purpose of Federal Government – Oversee the activities that involve two or more states or other countries – Constitution gives the federal government the power to regulate foreign and interstate commerce – Interstate Commerce – Business transactions involving companies in more than one state Our Government • Main Purpose of State Government – Regulate business activities within their own boundaries – Intrastate commerce – Business transactions involving companies that do business only in one state Our Government • Main Purpose of Local Government – Provide services needed for an orderly society • Ex – Police and Fire Department Government Protects • How does the government protect our rights? – Police and Fire Departments – Armed Forces – Laws for safe work environment • Safety standards for building, machines, and chemicals – OSHA (Occupational Safety and Health Administration) Government Protects • How does the government protect our rights? – Protect the basic human rights of workers • Cannot be denied work because of you race, religion, sex, or age. • Selection must be based on job requirements, training, and experience Government Protects • How does the government protect our rights? – Protect air, water, noise, and chemical pollution • EPA (Environmental Protection Agency) Government Protects • How does the government protect our rights? – Contracts and Special Property Rights • Patents, Copyrights, and Trademarks – Protect inventions and ideas that might profit for a company in the future Contracts • Contract – An agreement to exchange goods or services for something of value – May be written or unwritten • Must include: – Agreement – An offer must be made and an acceptance must occur. – Competent Parties – Those entering into the contract must be of legal age and must be mentally competent – Consideration – Something of measureable value must be exchanged – Legality – Must be for a product or service that may be legally sold Intellectual Property Rights • Intellectual Property – Property that is purely intangible that a person cannot touch – Patents • Gives that inventor the exclusive right to make, use, or sell the item for 17 years • Prevents other companies from making or selling a product that your company has created. Intellectual Property Rights • Copyrights – Protects the creative works of authors, composers, and artists – Protection continues for the life of the person receiving the copyright and for 50 years after the persons death. –© Intellectual Property Rights • Trademark – Word, letter, or symbol associated with a specific company or product – Company names, team emblems, or label designs may be registered with the government • Logo – Symbol identified throughout the world • TM – Unregistered • Registered • Last forever Government Regulates • Public Utilities – Organization that supplies a service or product vital to all people – Water, Electric, Gas, Telephone – Privately owned but are closely regulated by the government – Companies cannot set prices as they wish Government Regulates • Preventing Unfair Business Practices – Government attempts to promote fair competition – Monopolies – When a business has control of the market for a product or service. • Creates no competition and can set the prices as they wish • Could provide poor quality products • Antitrust Laws – Created to prevent monopolies and promote completion and fairness Government Regulates • Preventing Unfair Business Practices • Antitrust Laws – Created to prevent monopolies and promote competition and fairness – Also prevents other unfair business practices such as false advertising, deceptive pricing, and misleading labeling. » Each of these hurts and reduces consumer choice Government Assists Businesses • Purchase Products and Services – Roughly 20% of all goods and services purchased in the US • Hire Workers – Government is the single largest employer – About 1 out of every 9 worker is a public employee Government Assists Businesses • Government Raises Money – Revenue – Income raised • Gov’t raises revenue through Taxes and Borrowing – Additional sources of revenue: » Fines, Fees, and Licenses – Taxes – Levied on earnings, value of property, and on the sale of goods and services. Government Assists Businesses • Government Raises Money – Taxes • Income Taxes – Levied on the income of the individual – Largest source of revenue for the federal government • Corporate Taxes – Based on the businesses profits • Property Taxes – Largest source of income for Local Governments – Based on the value of your real estate – Used to pay for schools and other government services, such as police, fire, community parks, and libraries. Government Assists Businesses • Government Raises Money – Taxes • Sales Tax – based on the things we buy. – Borrowing • Bonds – Borrower pays back the debt plus interest. – Very little risk for the buyers of bonds