Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER Social Responsibility Government Protection Activities Government Regulation and Assistance Social Responsibility of Business and Government

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE2 Government Regulation and Assistance Goals Explain actions by government to regulate business. Discuss efforts of government to assist businesses. Identify methods used by government to raise money. 4-3

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 3 Key Terms public utility An organization that supplies a service or product vital to all people.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 4 Key Terms Monopoly Exists when a business has control of the market for a product or service.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 5 Key Terms antitrust laws Promote competition and fairness and avoids monopolies. It also prevents false advertising, deceptive pricing, and misleading labeling.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 6 Key Terms Revenue Government income is called revenue.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 7 REGULATORY ACTIVITIES Government regulates utilities...  A public utility is an organization that supplies a service or product vital to all people.  These include companies that provide local telephone service, water, and electricity.  A public utility is chosen to serve a community.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 8 REGULATORY ACTIVITIES Government regulates utilities...  While many utility companies are privately owned, usually government closely regulates them.  The rates they can charge for things such as electricity, water, or natural gas have to be approved by government agencies.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 9 REGULATORY ACTIVITIES Government prevents unfair business practices.  Government attempts to promote fair competition.  If a company charges different prices to different people for the same product, it is treating its customers unfairly.  If one business receives lower rates for the same quality and quantity of supplies than other businesses receive, it has an advantage.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 10 REGULATORY ACTIVITIES Government prevents unfair business practices.  A monopoly exists when a business has control of the market for a product or service.  A public utility monopoly may benefit consumers by making sure they receive a needed service at a fair price.  If the same company owned all food stores in your city, consumers might not be treated fairly.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 11 REGULATORY ACTIVITIES Government prevents unfair business practices.  One government action meant to promote competition and fairness and to avoid monopolies was the passage of antitrust laws.  Antitrust laws prevent other unfair business practices such as false advertising, deceptive pricing, and misleading labeling.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 12 Why does government regulate utilities? Answer Reasons for government regulation of utilities might include the assurance of fair prices, the conservation of resources, and to avoid overcrowding of utility poles and other facilities, such as power plants. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 13 GOVERNMENT ASSISTS BUSINESS Government helps businesses by collecting and reporting valuable information. Census information can help a business decide where a majority of potential customers live. The Bureau of Labor Statistics, the Department of Agriculture, and the Department of Commerce are a few of the government agencies that provide information.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 14 GOVERNMENT ASSISTS BUSINESS The federal government, through the Small business Administration (SBA), helps new businesses get started by guaranteeing private bank loans. Farmers and others may receive financial help in times of great hardship, such as during a drought, flooding, or other natural disasters. Destruction of home and property by a tornado may make a person eligible for a low-interest government loan.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 15 GOVERNMENT ASSISTS BUSINESS Government buys goods and services... Government spends a great deal of money each day to buy an array of products and services. Total federal, state, and local government spending make up about 20% of all the goods and services produced in the United States. Governments buy everything from file cabinets to building to military jet aircraft. Government pays businesses to construct highways and build schools.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 16 GOVERNMENT ASSISTS BUSINESS Government employs workers... Government is the single largest employer in the U.S. economy. About 16% of workers are public employees. Most people think only of police officers, firefighters, and sanitation workers as government workers. Administrative assistants, lawyers, teachers, meat inspectors, and data analysts are all employed by government.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 17 How does government assist business? Answer The government assists businesses in a variety of ways, including providing demographic data, buying goods and services, and employing workers who then have the means to buy goods and services. Checkpoint >>

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 18 GOVERNMENT RAISES MONEY Taxes A government creates tax policies to pay for the services it provides. Taxes are levied on earnings, the value of property, and on the sale price of goods and services. Income taxes are levied on the income of individuals. Corporate income taxes also provide government revenue.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 19 GOVERNMENT RAISES MONEY Taxes A major source of revenue for local governments is the real estate property tax. This tax is based on the value of land and buildings. Most property tax revenue is used to pay for schools and other local government services, such as police protection and community parks. A sales tax is a state or local tax on goods and services that is collected by the seller.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 20 GOVERNMENT RAISES MONEY Borrowing Government borrows money by selling bonds. Banks, insurance companies, and other financial institutions help finance governments by purchasing bonds in large numbers. By borrowing money, the government becomes a debtor and must pay interest on its debt. Bonds issued by the U.S. government are backed by the “full faith and credit” of the federal government.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 4 21 What is the difference between tax revenue and borrowing by government? Answer Tax revenue is money the government collects to cover the costs of services. This is money that the government is not required to pay back. The government is required to pay back money borrowed. Checkpoint >>