Test 7 Flashcards
Four Characteristics of Pure Competition
- Many buyers and sellers
- Identical goods or services are offered for sale
- No buyer or seller knows more than any other about the market
- Buyers and sellers are able to enter or exit the market at will
Pure Competition
Industry made up of many small businesses
How many buyers and sellers are in Pure Competition?
Enough that no individual can influence the market
Monopolistic Competition
A market where many firms are selling similar, but not identical, products
Three Characteristics of Monopolistic Competition
- Many buyers and sellers
- Products are slightly different
- It is easy to enter or exit the market
Oligopoly
A market dominated by a few large firms
Characteristics of Oligopoly
- There are few sellers
- They produce and sell either identical or slightly different products
- There are significant barriers to entry (difficult to enter the market)
Barriers to Entry
Anything that prohibits a firm from entering the market
Examples of Barriers to Entry
- Legal Barriers
- Extremely low average total costs
- Exclusive ownership of a scarce resource
Example of Legal Barriers
- Public Franchise
- Patent
- Copyright
Public Franchise
A right granted to a firm by the government that permits that firm to provide a particular good or service, and excludes all others
Patent
A monopoly to use a new product or idea exclusively for 17 years
Copyright
The exclusive right of authors of original writings and artistic works to sell or in any way reproduce their work for their lifetime plus several more decades
Monopoly
A market where there is only one seller
Characteristics of Monopoly
- There is no close substitute for the product
2. The high cost of entry prohibits other companies from entering
Sherman Anti-Trust Act does what
Outlaws monopolies
Legal Monopolies
- Public Utilities
- Patent
- Copyright
- Trademarks
Trademark
A special design, name, or symbol that identifies a product, service, or company
Trust
A business combination where management and control of the member corporations are vested in a single Board of Trustees who are able to control a market, absorb or eliminate competition, fix prices, ect.
(Trusts are illegal)
Pool
An agreement to divide business and share the profits
Illegal
Interlocking Directorate
Where some of the same people serve on multiple Boards of Directors and they run all of these companies as the same company
(Illegal)
Stock Watering
Where they lie about a companies profits
Illegal
What is the purpose of Stock Watering
To sell stock of your company
Holding Company
A corporation that is organized to hold the bonds or stock of other corporations
(Legal)
Merger
A combination of two or more companies into one
What happens after the merger
The acquired firm is either dissolved or becomes a division of the combined new firm
Why do they have mergers?
- To add new products
- To benefit from increased size
- To reduce or eliminate competition
- To reduce costs
Type of Mergers
- Horizontal Merger
- Vertical Merger
- Conglomerate Merger
Horizontal Merger
A combination of two or more companies engaged in the same business
Vertical Merger
A combination of two or more companies involved in different steps of the same production process
Conglomerate Merger
A combination of two or more unrelated businesses
Sherman Anti-Trust Act
Prohibits any business combination that is in restraint of trade
Clayton Anti-Trust Act
Specified what acts were in restraint of trade
Federal Trade Commission Act
- Sets up the Federal Trade Commission
2. Prevents misleading advertising and other unfair business practices
Celler-KeFauver Anti-Merger Act
Declares mergers to be illegal where they serve to lessen competition or tend to create monopoly
Types of Workers
- White collar
2. Blue collar
Differences Between White and Blue Collar
Blue collar does more physical labor
White collar might make more money
Types of Blue Collar Workers
- Skilled
2. Unskilled
Skilled Labor
Have training
Unskilled Labor
Not trained
Are there more skilled or unskilled workers?
Unskilled
Labor Union
An organization that seeks to increase the wages and improve the working conditions of its members
Why Do People Join Labor Unions?
- Higher wages
- Better hours
- Safety/working conditions
- Job security
- Legal protection/benefits
Types of Labor Unions
- Craft Union
2. Industrial Union
Craft Union
A union organized to include workers with a specific set of skills or occupations regardless of where or what industry they are employed
Industrial Union
A union organized to include all workers in an industry regardless of skills
Open Shop
Union membership may never be required as a condition of employment
TN is a open shop state
Closed Shop
Union membership is a condition of initial employment
Illegal
Union Shop
Union membership may not be required of initial employment, but after a certain period of time Union membership may be required to keep the job
Biggest weapon that a Labor Union can use?
Strike
Strike
Work stoppage
Purpose of Strikes?
Put pressure on the employer
Picket
Standing outside the factory with signs
Purpose of Picket Line
- To draw attention
- To discourage business
- Stop strike breakers
Strike Breakers
Substitute workers to take over for the strikers
Types of Strikes
- Jurisdictional Strike
2. Secondary Strike
Jurisdictional Strike
A strike that involves one company and two labor unions
Secondary Strike
A strike that involves two companies and one labor union
How does a Jurisdictional Strike work?
A union goes on strike against a company because of grievances against another labor union in order to get concessions from a company
How does a Secondary Strike work?
A labor union goes on strike against a company, which it has no grievances with, in order to force it to put pressure on a company that it does have grievances with
Management Weapons Against Labor Unions
- Yellow Dog Contract
- Blacklisting
- Lockout
- Strike Breaker
- Scab
Yellow Dog Contract
In order to be hired, you must pledge to not join a labor union
(Illegal)
Blacklisting
Employers prevent fired employees by giving a list with their name to other companies
(Illegal)
Lockout
Management closes the business in order to put pressure on the workers
(Illegal)
Strike Breaker
Someone who comes in and works while the labor union members are on strike
Scab
Worker that is paid to spy on other workers
First National Labor Union
National Labor Union
Leader of National Labor Union
Sylvias
2nd National Labor Union
Knights of Labor
Leader of Knights of Labor
Uriah Stephens
How is Knights of Labor different?
Included:
All races
Both genders
Skilled and unskilled
What labor union was founded after these died out?
American Federation Union
Leader of the American Federation of Labor
Samuel Gompers
Leader of American Railway Union
Eugene Debbs
Who could be in the American Railway Union
Anyone who works in the railways
Congress of Industrial Organizations (Labor Union) was formed by who
John Lewis
Leader of AFL-CIO (American Federation of Labor-Congress of Industrial Organizations)
George Meany
What happened to AFL-CIO
It became the largest labor union
Conspiracy Doctrine
An individual worker has the right to make demands of an employer but when two or more worker ban together it becomes an illegal conspiracy
Commonwealth vs. Hunt
Labor unions are legal
Clayton Act
Excludes the labor unions from anti-trust laws
Norris-LaGuardia Act
Outlaws Yellow Dog Contracts
Wagner Act
- Guarantees a workers right to join a labor union and collective bargain
- Made it illegal to discriminate against labor union workers
Fair Labor Standards Act
Provides for a minimum wage and anything beyond 40 hours a week, you have to be paid .5x extra
Taft-Harley Act
- Outlaws Closed Shop
2. Gives the states the authority to pass Right to Work Laws (open shop)
Landrum-Griffin Act
Purpose was to reduce corruption in labor unions
The embezzlement of union funds becomes a federal offense
Union election would use the secret ballot
Civil Rights Act
Prohibits discrimination in hiring, firing, and promotions on the basis of race, color, religion, gender, or national origin
Arbitration
Involved a third party known as the arbitrator to solve problems
Each side presents their case to the arbitrator
The arbitrator will then hand down a legally binding decision which can only be overturned through the courts
Mediation
Involves a third party known as the mediator
Each side presents their case to the mediator
The mediator then tries to get both sides to reach an agreement
(not legally binding)
Conciliation
Involves a third party that is chosen
Third party tries to get both sides to negotiate
Third party is not actively involved in the negotiation (unlike mediation)