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different roles a government has in the economy - Coggle Diagram
different roles a government has in the economy
Promoting a stable market
Monopoly
When a company or group has complete control over the supply of a product or service.
Monopolies are a bad thing because they cut our competition. If a company does have a monopoly they can set it to any price they want, but there is less incentive to create a better quality product (no competition.)
An example of a monopoly was when the De Beers consolidated mines once controlled a majority of the market for diamonds. Which then they had gained control by pricing out their competitors and once they had control they were able to control the price of the diamonds.
Promoting a stable market is the government's way to stabilize and regulate the economy to make it more stable and predictable.
Ensuring safety if the consumer
Role of health Canada
The role of health Canada is to add certain labels to the product to warn the consumers of what the product contains. This gives people information on what they are consuming or warns them what could happen if they consumed something they were not supposed to. It is mandatory for products to have a clear display of the nutritional value of the food packaging
Role of CSA
The role of a CSA (Canadian Standard Association) is to ensure that products meet the industry’s standards for safety. To ensure that it fits the standards the product undergoes extensive stress tests and material science tests.
Product recalls
Product recalls allows customers to request to return a product after a safety issue or a defect in the product. It allows the customers to have a refund or get the product repaired for free.
Environmental protection
Some big companies and businesses care more about profit than environmental sustainability. Which then the companies/businesses would pollute freely into getting the name of maximizing profits.
Which then the government agencies ensured that companies meet the environmental protection standards.
The environment and climate change in Canada informs Canadians about protecting and conserving our natural heritage/resources and ensuring that we would have a safe, clean sustainable environment for the present and future generations.
An example of environmental protection is after forestry companies harvest trees for public or “crown” land. After they had cleared the trees of they land they MUST pay to have the trees re-planted with trees to ensure the sustainability of our forests/environment.
Labor laws
Labour laws are laws that protect the workers and their rights, it focuses on the work environment of employers so that they are protected
They are important because it ensures that employers have fair pay, fair working hours and that all are treated fairly
Crown corporations
The crown corporations are usually created to fulfill a need that would not make any profit for a private company. Just like water and electric infrastructure in towns and cities.
It would take decades for a private company to earn a profit after initial investments of building required infrastructure. For this the government instead would use tax dollars to create infrastructure for the people.
An example would be just like the CBC because it is 100% funded by the government and that it creates 100% Canadian content.
Even the CRTC ( Canadian Television Telecommunications Commission) is an example as it ensures that television and radio companies must play a certain amount of Canadian content as it is completely funded by the government.
Prevent price fixing
Price fixing is when companies agree to increase the prices of their products or goods and even services to create more profit out of it
An example of price fixing is when both Urban planet and Urban outfitters clothing company both make some clothing price increase for both to make more profit out of it.
The act that protects consumers from companies price fixing is the consumer protection act. This act ensures that consumers are informed about the product , the services, and the transactions being made to make sure they are safe from unfair business
Drawbacks of government involvement in the economy
Government corruption
It is against the law for government officials to use private information to gain profit, this is called insider-trading.
Recently a group of US senators sold a significant part of their stock portfolio after a private briefing about the damage COVID-19 would do to the stock market
Waste and Inefficiencies
Waste and Inefficiencies is referred to as any activities or process that doesn’t have a value to the overall operation of the business.