QUIZ 4 (the role of government) -ECONOMICS
FTC (federal trade commission)
((Which agency has this task?)) Administers antitrust laws forbidding unfair competition, price fixing, and other deceptive practices
FDA (food and drug administration)
((Which agency has this task?)) Enforces laws to ensure purity, effectiveness, and truthful labeling of food, drugs, and cosmetics; inspects production and shipment of these products
FCC (federal communications commission)
((Which agency has this task?)) Licenses and regulates radio and television stations and regulates interstate telephone and telegraph rates and services
SEC (securities and exchange commission)
((Which agency has this task?)) Regulates and supervises the sale of listed and unlisted securities and the brokers, dealers, and bankers who sell them
Trusts
Combinations of firms designed to restrict competition or control prices in a particular industry
Price discrimination
The practice of selling the same product to different consumers at different prices if it substantially lessens competition
Public disclosure
The requirement that businesses reveal certain information to the public
Natural monopoly (ex. cable television companies & water/electric utilities)
Under what conditions are monopolies acceptable?
Good roads, highways, museums, libraries
What are two examples of needed public goods that are provided by the government?
Inadequate information and public goods
What are two market failures the government is able to correct?
Supplying public good. Promoting transparency
What government actions led to a modification of free enterprise?
Electric, water, and cable companies
What is one example of how local or state government allows and regulates a monopoly?
It prevents sellers from making false claims about their products
What is the advantage to the public of truth-in-advertising laws?
Allows business to reveal certain information to the public
What is the purpose of public disclosure?
Monopolies and trusts
What was the antitrust legislation of the late 1800s trying to restrict?
To give government more power over monopolies. It outlawed price discrimination
What was the purpose of the Clayton Antitrust Act of 1914, and what practice did it outlaw?
To protect trade and commerce against unlawful restraint and monopoly
What was the purpose of the Sherman Antitrust Act?