Journal 37 Jelly Beans Supply and Demand Graph

Journal #37 Jelly Beans Supply and Demand Graph A Graph B Graph C 1. The government places a tax on foreign jelly beans, which have a considerable share of the market 2. The price of soda, a complementary good for jelly beans, increases. 3. Widespread prosperity allows people to buy more jelly beans

The Role of Government

The Role of Government Journal #37 What are the characteristics of imperfect Competition?

Maintain Competition • Antitrust Legislation (trust is a combination of firms designed to restrict competition or control prices in an industry) – To stop price discrimination: practice of selling the same product to different consumers at different prices if it substantially lessens competition • Government Regulation – Developed agencies to monitor industries in the market

Time Line of Legislation 1800 Sherman Antitrust Act 1890 Outlawed all contracts “in restraint of trade” to halt the growth of trusts and monopolies Today Clayton Antitrust Act 1914 Strengthened the Sherman Act by outlawing price discrimination Federal Trade Commission Act 1914 Established the Federal Trade Commission to regulate unfair methods of competition in interstate commerce Robinson. Patman Act 1936 Forbade rebates and discounts on the sale of goods to large buyers unless rebates and discounts were available to all

Improve Economic Efficiency • Promotes transparency (information is open and available to all) – Public disclosure (requirement that businesses reveal certain information to the public) • Sale of stocks • Provide public goods – Free market economy does not usually produce public goods (no financial gain)

Activity • Practice test – Try to answer without notes first. Then look to your book for answers – 30 minutes – We will go over answers • Get into groups and discuss the project be prepared to start immediately tomorrow. – I want your business by the end of class