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Government Roles in the Economy - Coggle Diagram
Government Roles in the Economy
Promoting a stable economy
Monopolies
a company or group has complete control over the supply of a product or service.
Monopolies can be a bad thing
They cut out competition, If a company has monopoly they can set the price,Less incentive to create a better quality product
Example of a Monopoly
include
Ensuring the Safety of the Consumer
Example-Health Canada
Has regulations for the companies that produce goods for us consumers. They require nutrition labels to be put on food items and warning on cigarette packs
Governments oversee the production of some goods and services to ensure they are safe for consumers to use.
Example-Canadian Standards associations
The CSA and the Consumer Product Safety Commission (CPSC). This is an example of a Crown Corperation
Product recall
This is when a product passes all safety tests it is usually trusted in the market, however, the government agencies responsible for consumer safety cannot oversee all production. Sometimes items slip threw and is not safe for consumption. This is when a recall allows the consumer to have their purchased good repaired for free or get a refund.
Environmental Protection
Some companies and businesses care more about profit than environmental sustainability, and if left to their own devices, they would pollute freely in the name of maximising profit. Governing agiences make sure
Environment and Climate Change Canada informs Canadians about protecting and conserving our natural heritage, and ensuring a clean, safe and sustainable environment for present and future generations.
Example
Forester companies harvest tress from public or 'crown' land After the trees are harvested they must pay to have the trees replanted to ensure sustainability of forests
Crown Corporations
Crown Corporations
are federal or provincial owned organizations that are structured like private or independent businesses. Some Crown Corporations exist to promote Canadian culture like CBC.
Private Crown Corporations
Sometimes a government will think it is a good idea to sell a crown corporation to the highest bidder and privatize it. This can be done for several reasons but typically it is cost and in some cases the privately run company is more efficient and cost-effective.
Examples
include CBC, Canada Post, VIA Rail, Bank of Canada
Examples of Privitized Crown Corps
include Air Canada, Petro Canada, and Canadian National Railway
Crown Corporations are usually created to fulfil a need that would not make any profit for a private company. An example of this is electric and water infrastructure in towns and cities. It would take decades for a private company to earn a profit after the initial investment of building the required infrastructure. The government instead uses tax dollars to create this infrastructure for people.
Drawbacks of government involvement in Economy
Labour Laws
Laws are put in place to protect workers and employer, Governments enforce occupational health and safety standards, They conduct inspections and investigate workplace accidents and injury's. These laws are important so workers and employers are in good health and can continue to produce goods and services to others
The government ensures that employees have such rights as: Proper notice for termination, A limit on weekly work hours, Minimum wage, Mandatory breaks and rest periods, Youth labour laws and Right to refuse unsafe work And many others!
Prevent Price Fixing
The government can ensure companies cannot fix their prices to be askew from normal market forces (supply and demand). This protects the consumer as it keeps prices for goods and services fair and affordable. Price fixing prevention is enforced under the Competition Act which serves to promote competition and ensure the best prices for consumers.
Price fixing occurs when several similar companies agree to inflate the price of their goods or services to increase profits. Price fixing goes against the law of supply and demand by in a sense creating a monopoly. (Actually it is called an oligopoly, when a small number of companies control the market of a certain product). An example of this would be if shell, esso, and petro-canada agreed to increase their fuel prices by the same amount to make more profit.