3.1-3.4 US History Review Questions

what was Standard Oil's purpose for forming a trust?

because instead of buying a company outright the stockholders gave their stocks to a group it oil trustees, in exchange for receiving shares in trust, which entitles them to a portion of these profits.

how do big businesses benefit from economics of scale?

big manufacturers while operating costs were low. operating costs were such a small part of total costs that it made sense to continue operating even in a recession. they had many advantages including being able to produce more goods at a lower prices to increase cost and could stay open in bad economic times by cutting prices and increasing sales. Small family owned business could not compete with big companies and were driven out of business.

how did the completion of the transcontinental railroad contribute to the closing of the frontier?

building the railroad lines required more money than most private investors could raise on their own. to encourage railroad construction across the Great Plains, the federal government gave land grants to many railroad companies because the land was only valuable if they sold it. to convince people to move west, railroads and real estate companies offered the land at low prices and provided credit to settlers.

why did railroad construction expand so rapidly after the civil war?

by linking the nation, railroads increased the markets for many products, spurring industrial growth. Railroad companies also stimulated the economy by spending huge amounts of money on steel,coal, timber, and other materials.

how did innovation in communication improve the standard of living in the U.S.?

family members could quickly get in touch with each other, businesses could place orders much more quickly, and news of events that might shape personal and business choices could be obtained in time for better decisions to be made.

what technological innovation did Andrew Carnegie bring to the steel industry and how did it affect economic development in the U.S.?

he began the vertical integration, meaning it owned all of then different businesses on which it depends for its operation. He bought coal mines, limestone quarries, and iron ore fields. It saved money and enabled many companies to expand.

how did the development of technological innovations using electric power contribute to the economic development of the U.S.?

inventions like the telephone, light bulb, etc. changed American way of living and developed the economy in the U.S. by factory machines mass producing and selling everything at a lower price.

what are three benefits that supporters of laissez-faire economics believe it provides?

laissez-faire relies on supply and demand rather than the government to regulate wages and prices. they also support low taxes and limited government debt to ensure that private individuals will make most of the decisions about how the nations wealth is spent. they also believe in a free market with companies leads to greater efficiency and creates more wealth for everyone.

what role did entrepreneurs play in the industrialization of the U.S. and why were they willing to invest their money in American companies?

new inventions would not have been possible without them willing to risk their money to help develop and implement their inventions. many who accumulated money by investing in trade, fishing, and textile miles, invested their money in factories and railroads.

how did railroad companies improve the standard of living in the U.S.?

settlers no longer had to migrate the entire distance on their own, they could take the train to a location near the land they bought.

in what ways did laissez-faire economic policy change the structure of American business and how did these changes affect the government's relationship with business?

there were no regulations governing their competition, companies were also free to make deals with each other to fix prices by organizing pools, but had no legal protection and could not enforce their pool agreements in court.

what kinds of business practices caused some railroad owners to be accused of being "robber barons"?

they were accused that they had built their fortunes by swindling investors and taxpayers, bribing officials, and cheating on their contracts and debts. railroad investors discovered they could make more money by selling free government land grants than by operating a railroad, and some bribed political representatives to vote for more grants.