1. The Role of Government in Business
Chapter 11
The Role of Government in Business pp
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2. HOW GOVERNMENT AFFECTS BUSINESS
Government regulates things to protect
Businesses
Public
From unfair, unsafe, and unethical practices.
Promote economic growth by passing laws at local, state, and national levels.

3. REGULATOR ROLE Three different levels of government
Federal
State
Local
Each oversees different levels of business

4. REGULATES? Federal Government regulates: State Government regulates:
Interstate commerce – business that takes place across state lines
State Government regulates:
Intrastate commerce – business that takes place within the state

5. REGULATES? (2)
All levels of government regulate four aspects of economy:
Protecting competition
Protecting business agreements
Protecting creative properties
Regulating the production process
Focus on each of these on next slides.

6. 11 Chapter Government regulates these four aspects of the economy.
Figure
11.1
GOVERNMENT REGULATIONS
Government regulates these four aspects of the economy.
Which one do you think has side effects on our environment?
Introduction to Business, The Role of Government in Business
Slide 6 of 54

7. PROTECTING COMPETITION
Oligopoly – when a small number of businesses control the market
What is the market?
Market is wherever buyers and sellers get together to exchange goods and services
Do we have any of these?
Airlines and Gas Companies
Government sometimes lets these happen when too expensive for others to compete

8. PROTECTING COMPETITION
Monopoly – One company controls an entire industry
No competition, so charge whatever they want.
You want product, you pay what they ask
Do we have any of these?
Cable company, Electricity, Water, AmerenCilco for Gas
Government sets maximum prices

9. PROTECTING COMPETITION
Trust – when competing companies agree not to compete with each other to form a monopoly
In 1890’s, trusts were in oil, sugar, steel
Government has antitrust laws to keep this from happening
Law allows government to break up, regulate, or take over monopolies

10. FEDERAL TRADE COMMISSION (FTC)
Regulates Interstate trade
Sets standards for honest advertising

11. PROTECTING BUSINESS
Contract – legal agreement between two or more parties to conduct business.
Written, verbal, handshake
Contract protects all parties involved
Customer, business, lender, etc.
Breach of Contract – When one party fails to live up to the terms of the contract

12. PROTECT CREATIVE PROPERTY
Creative Property – things like inventions and artwork
Protected with copyright, patent, or trademark

13. CREATIVE PROPERTY
Copyright – gives artist sole right to their own creation, such as plays, photos, music, paintings, and books.
Lasts for 70 years after artist dies
You get paid for use of your copyright material

14. CREATIVE PROPERTY Patent – sole right to your invention
Should patent any invention you create
Trademark – brand name, trade characteristic, or any combination given legal protection by federal government
Doritos, VISA, M & M’s
Trademarks

15. PRODUCTION PROCESS
Tries to stop industrial pollutants with regulations
When Federal government can not enforce, state and local take over
Budget cutbacks have caused this area to be overlooked

16. 11 Chapter WORKING FOR TAXES
Figure
11.2
WORKING FOR TAXES
During an average eight-hour workday, nearly three hours of your workday goes to paying federal, state, and local taxes. This comparative chart shows where people work the most and least for taxes.
Name some ways in which the government spends the money for projects or services on your community.
Source: Tax Foundation
Introduction to Business, The Role of Government in Business
Slide 16 of 54

17. GOVERNMENT AS PROVIDER
Government provides things that you can not provide for yourself
Roads
Safety
Military
Water treatment
Money to pay for these services comes from taxes

18. GOVERNMENT AS PROVIDER
Government is also a business
Buys and sells goods and services
People tell government what they want it to buy through elected officials
Government often has to choose which needs/wants to satisfy
Government also has to consider public welfare

19. GOVERNMENT AS PROVIDER
You do not always benefit from services you pay for
School – if no children
Fire department – if your house never burns
People that use these goods do not pay full cost of services
All people (through taxes) share costs

20. GOVERNMENT AS PROVIDER
Government spending directly affects how resources are allocated.
Wherever government decides to spend money, jobs, and more money will come to those areas
Missile and urban example
Government spending influences distribution of income (transfer payments)
Amounts paid to needy families can be altered as needs arise

21. PROVIDING PUBLIC SERVICE
Government is single largest provider of services in the country.
Largest expenditures are transfer payments
Welfare, unemployment, and social security

22. PROVIDING PUBLIC SERVICE
Provide NECESSARY services for safety
Military, Police, Fire Protection
Provide promotion of social welfare
Parks and Libraries
Provide services for Society
Schools, roads, courts, post offices, etc.

23. PROVIDING PUBLIC SERVICE
Cost to provide services is HUGE
Taxes – What the government collects to pay for services
Revenue – The money the government takes in.

24. TAXES Taxes are raised at each level Federal (income tax most common)
Used for social security, defense, highways and education
State (sales tax and income tax)
Used for courts, roads, and education
Local (property tax, sales tax)
Used for parks, fire and police and education

25. PROVIDING WORK Government is single largest employer in US
Over 3,000,000 people (three million)
President, mayor, state representative
Police, army, teachers, public library, city bus
Government also pays unemployment insurance to people out of work
Also has welfare and job training programs

26. STOP SLIDE

27. ASSISTING BUSINESS
Government is largest consumer of goods and services
Buys and uses more goods and services than any other organization in the United States
Government assists small business owners with the Small Business Association (SBA)
Helps with loans

28. ASSISTING BUSINESS
Also loans money to big businesses to help them stay in business
Good for economy – keep jobs

29. ASSISTING BUSINESS - INCENTIVES
Subsidies – What the government pays to businesses to help with their costs
Corn producers have to lower their costs to compete, government pays the difference
Tax Incentives – lower taxes for businesses
If being socially responsible
Conserving energy or resources
Businesses can get BOTH of these incentives

30. STOP SLIDE