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Government Influence - Coggle Diagram
Government Influence
- Promoting a stable market
What is a monopoly? A monopoly is when a company has complete control or supply of a product or service.
Why are monopolies bad? They are bad because they cut out competition, if a company has a monopoly they can set the price to whatever they want, and they have no incentive to make a better product.
An example of a monopoly: De Beers had a monopoly over diamond which allowed them to make people believe that they were scarce and it allowed them to overprice the diamonds.
- Ensuring the safety of the consumer
Role of health canada: health canada sets regulations for companies that produce goods for human consumption.
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Product recalls:If a product slips through the safety inspection, while not actually being safe it can be recalled to either fix the problem or get it off the market.
Why is it important? Environmental protection is important because some businesses car more about profit than environmental stability.
An example of environmental regulation on businesses: Forestry companies harvest entire forests, but at the end they have to pay for the forest to get replanted to ensure stability.
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Why are they important? They are important because they ensure that the employees have the rights for proper notice for termination, limit on weekly work hours, minimum wage, mandatory breaks, youth labour laws, and the right to refuse unsafe work.
What are they and why do they exist? Crown corporations are wholly owned federal or provincial organizations; they exist to fulfil a need that would not make a profit.
Some examples: CBC, Canada Post, VIA Rail, and Bank Of Canada.
What is price fixing? Price fixing is when the government ensures that companies cannot set prices that are out of line with normal market forces. An example is if Shell, Esso, and Petro-Canada agreed to increase fuel prices.
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- Drawbacks of government involvement in the economy
Waste and inefficiencies: Government organizations sometimes have a reputation for being wasteful, this is because their employees are usually well paid and have good security, which can lead to some people becoming lazy and inefficient.
Government corruption and collusion: Even though governments have a lot of power it is still against the law for government officials to use private information for profit. An example of this happening is when a group of US senators sold a large part of their stocks after a private briefing.