1 Reminder: Take practice test. What will we learn today? What will we learn today? The role of government in a market economy Identify the factors that may cause the costs of government actions to outweigh the benefits Unit: Market Structures Day 5 What is your greatest accomplishment ?

Behavior/Expectation Policy No more food, drink, or cell phone in November. We’ll talk about it in December is behavior is not a problem. 2

Assignment 15: 7.4 Regulation and Deregulation 3

I. Market Power Sometimes firms practice predatory pricing, or selling a product below cost to drive competitors out of the market. 4

II. Government and Competition Antitrust laws: laws that encourage competition Trust: like a cartel; an illegal grouping of companies that discourages competition The US Gov. tries to make sure businesses act appropriately. The Federal Trade Commission makes sure that firms do not force out competition. 5

In 1890, the Sherman Antitrust Act gave the federal government the power to break up monopolies. In 1982, US Gov. broke up ATT into 7 phone companies; prices did get lower. Merger: the combination of two or more companies into a single firm Sometimes the gov. tries to block mergers if they think it will not benefit the people. Generally, mergers mean less competition, and less comp. means higher prices. 6

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III. Deregulation Deregulation: the removal of some government controls over a market Sometimes deregulation works great. Other times, it fails terribly. Banks were deregulated 10 years ago. Profits skyrocketed. But today, we are seeing the backlash of no regulation. California deregulated their electricity about 10 years ago. Remember when we had blackouts all the time? Deregulation was a total failure in that instance. 8

Review What is the purpose of antitrust laws? Why does the government often not approve mergers? Why does predatory pricing hurt competition? How can deregulation help an industry? How can it hurt an industry? 9

Assignment 16: Chapter Crossword 10

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The Power of Ads You will get into groups of 2-4 (pick people you are comfortable working with, possibly after school) In groups, you will choose a product to sell. You will use non price competition to encourage people to buy your product. For this product you must create: 1. A slogan- short catchy saying 2. A advertisement- hand drawn poster with slogan and picture that includes advertising technique, message and target audience. 3. A commercial- short skit that includes advertising technique, message and target audience All group members must participate in commercial. - You must use props and scripts. - Commercial will be performed in front of class. (You can record on your own, but must be in a format that can be shown to class.) This project is worth 50 points, so be sure to do a good job.

Homework You MUST take practice tests. This is not for extra credit. This is required. This assignment is for ten points. If you don’t know how to do it, go to the website and carefully read the directions. You don’t need to answer the short answer/essay questions. 13