Long-Term Investment Decisions

“For example, the federal government regulates the quality of food and water, the safety of workplaces and airspaces, and the integrity of the banking and finance system.” (Bianco, Canon 2011, p 582) Regulations find out if the product is a market failure. There are two types of regulations, which are economic and social. “Economic regulations sets prices or conditions on entry of firms into an industry, where as social regulation address issues of quality and safety.” (Bianco, Canon 2011, p 582) Economic regulations are concerned with the price regulation of monopolies.

business and causing many workers to lose jobs. In this paper I will point out

There are different types of businesses, for example, some use monopolies, trust and pools, while other eliminate competition for higher prices. As stated in “Progressive reformers regarded regulation as a cure for all sorts of socioeconomic and political problems” , “The Sherman Act of 1890 attempted to outlaw the restriction of competition by large companies that co-operated with rivals to fix outputs, prices, and market shares, initially through pools and later through trusts” , meaning, competition is the

In Document 4 “A Call to Action,” by James B. Weaver, it explained to the public through the author's thoughts of that monopolies had too much power and that the monopolies destroy competition and trade. This book was written at the time of when big corporations were taking over and destroying competition. Also, the author goes into detail that they control the price of the raw material, so they can produce their products at a low price and sell it at a low price. By selling that the lowest price, the competitors can not compete are driven out of business or reduce the wages of the workers. This idea can be related to current times were big corporations, such as Walmart, are destroying competition because they lower their prices that the competitors cannot compete with.

B) The intended purpose of Industrial or Economic regulation as applied to Oligopolies and Monopolistic market structures is used to reduce the market power of both! A government commission regulates the prices charged by “natural monopolists.” Industrial Regulation is necessary to prevent natural monopolies from charging monopoly rates which may harm consumers/ society. Industrial Regulation tries to establish pricing that will cover production costs and provide a fair amount of return to businesses. Price=Average Total Cost, where normal profit is accomplished. (governs pricing, output, & profits in specific industries).

Many utilities are monopolies by having the entire market share in certain areas. With deregulation of these utilities, the market becomes open to competition for market share to begin. In terms of regulation of monopoly, the government attempts to prevent operations that are against the public interest, call anti-competitive practices. Likewise, oligopoly is a market condition where there are minimal distributors that have a major influence on prices and other market factors. This causes market failure, especially if evidence of collusive behavior by dominant businesses is found.

When consumers decide to purchase a product or service a car, a new refrigerator, or prescription drugs, the goal of the antitrust laws is to make sure their choices are not restricted unreasonably. Consumer choice is a powerful incentive for the sellers of any products to keep their prices low and their quality high. When the antitrust laws are vigorously enforced, businesses must respond to what consumers want. A business that ignores consumer wishes, by refusing either to keep prices competitive or to offer

What are the main reasons why government should take only a limited role in a market economy?

The current issues that have been created by the market have trapped our political system in a never-ending cycle that has no solution but remains salient. There is constant argument as to the right way to handle the market, the appropriate regulatory measures, and what steps should be taken to protect those that fail to be competitive in the market. As the ideological spectrum splits on the issue and refuses to come to a meaningful compromise, it gets trapped in the policy cycle and in turn traps the cycle. Other issues fail to be handled as officials drag the market into every issue area and forum as a tool to direct and control the discussion. Charles Lindblom sees this as an issue that any society that allows the market to control

Government plays a crucial role in the market economy by ensuring the laws and regulation are abide by, and control the production of the private sectors, although, over the years its efforts in controlling such economies are minimal and insignificant. Market forces of demand and supply play a major role in setting trends that such market economies follow. Economic growth, inflation, interest rates, wage rates of workers and unemployment rates are some of the fields the government takes part in controlling, to boost the Gross National Product (GNP) of the state.

The government does not necessarily need to intervene how the marker goes. Therefore, the competition is a significant factor of the free marker economy.Active but limited government is another main part of the free market economy. This means that the government undertakes a significant, active role in the market, but at the same time the government’s role is ver limited because all the investments and decisions in the economy are controlled by the market than by the government. An invisible hand will control the market. Limited government is a type of government in which there is a minimum intervention in personal properties. Overall, the government tries to keep the economy in a law and let it free by limiting itself. Hence, the limited government is an essential factor of the free market economy.Last, self-interest is a significant part of the free market economy. Self-interest refers to one’s desire to buy something. The market will be generally controlled by people’s interest; the companies will compete with one another to fit the best taste. This is because the people’s interest will be the main trend in the market and it will control what should be made in the market. Consequently, the market will be self-regulated according to the theory of a free market. Therefore, the self-interest is another significant factor of the free market economy.Therefore, the competition, the

Governments may intervene in the market system to fix prices above or below equilibrium if they believe that it is in the public interest to do so. Governments may intervene in the provision, regulation, maintenance and management of public goods to maximise the benefits to the

A monopoly is exclusive possession or control of the supply or trade in a commodity or service and in an economy this form of power can create a decline in the welfare of the consumer. The government may seek to regulate monopolies as a way to protect the interests of the consumer and use regulations as a way to limit price increases. These regulations are intended to reduce the practices of unfair business because monopolies have the ability to charge unreasonable high prices for the goods and services proving detrimental to consumers.

He concludes on this thought stating, “What the market does is to reduce greatly the range of issues that must be decided through political means, and thereby minimize the extent to which government need participate directly in the game.” Friedman more narrowly believed the government should intervene with “indivisible matters.”

Does the government have the right to regulate large corporations, namely the Microsoft Corporation? If so, then to what extent can the government do so? Based on our research, it is the government’s responsibility to remedy Microsoft’s noncompetitive behavior in order to increase fair competition.