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Government Roles in Economy - Coggle Diagram
Government Roles in Economy
Promoting a Stable Market
Monopolies are bad because they cut out competition, and aren't motivated to create a better quality product. They also have the power to set the price at what they want
An example of scarcity would be the brand "De Beers."They controlled majority of the market for diamond. They gained control by pricing out all their competitors, and when that happened, they controlled the price for all the diamonds. Since they had control of the supplies, that lead to artificial scarcity to increase prices.
A monopoly is when a company/group has 100% control over the supply of a product/service.
Labour laws
Labour laws are laws that protect worker and employer rights.
They are important because they protect the rights such as minimum wage, the right to refuse unsafe work, mandatory breaks and rest periods, etc.
Prevent Price Fixing
Price fixing is when several simulator companies agree to inflate the price of goods or services to increase profits. An example would be Shell, Esso, and Petro-Canada agreeing to increase their fuel prices by the same amount to make more profit.
The competition Act ensure the best price for consumer by prompting competition.
Ensuring the Safety of the Consumer
They ensure that products meet industry standards for safety.
Product recalls are when products get sold and are not are safe. When this happens, the government can issue to recall the product. When a recall happens, the consumers have the ability to get their purchase goods repaired for free, or get a refund.
The role of Health Canada is to set safety regulation for companies that produce goods for human consumption.
Drawbacks of Government Involvement in the Economy
Government organizations can be inefficient and wasteful. Because of government employees being well paid, this leads to people becoming lazy and inefficient at their job. This is wasting our tax dollar on paying for their bloated salary. Private companies run on profit, so finding efficiencies makes it more competitive and profitable. People believe crown corporations should be privatized.
It is illegal for government officials to implement insider-trading (private information to gain profit). Governments hold lots of power and are privy to information outside the public sphere. An example would be a US group of senators sold a significant part of their stock after a private briefing about the damage COVID-19 would do to the stock market.
Environmental Protection
The government agiencies make sure that compainies meet enviormental portention satndards to protect the enviorment from pollution, etc.
Examples would be the Environment and Climate Change Canada, because their goal is to inform Canadians about protecting and conserving our natural heritage. Also, the Forestry Companies and Harvesting makes companies pay for the trees they cut down en order to regrow the trees.
Crown Coporations
Crown Corps are wholly owned federal or provincial organizations that are structured like private businesses. They exist to promote Canadian culture and identity.
Some examples would be: CBC, Canada Post, bank of Canada, VIA Rail,etc