Page 193 - Business Principles and Management

C HAPTER 7 A SSESSMENT

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CHAPTER CONCEPTS

• Federal, state, and local governments regulate business activities
to protect citizens and businesses. The Federal Trade Commission
administers federal laws that regulate commerce. Landmark laws
such as the Sherman and Clayton Acts helped set the stage for
defining fair competition. Other federal agencies regulate basic
industries such as aviation, communications, and food and drugs.
• A downside of free enterprise is that some firms go bankrupt, but bank-
ruptcy laws allow businesses to recover or to exit business operations
fairly. The federal government protects individuals and firms from the
theft or misuse of their inventions, publications, and other intellectual
property by granting the owners patents, trademarks, or copyrights.
Local and state governments also regulate business through licenses,
zoning laws, and franchising regulations.
• Governments obtain revenues through taxes to pay for public
services, such as police, schools, and other human services. The
most common sources of revenue are income, sales, and property
taxes.
• A progressive tax such as an income tax is based on one’s ability to
pay, and is higher for those who earn more than for those who earn
less. A proportional tax such as a county’s real estate tax stays the
same regardless of a property’s current value. A regressive tax, such
as a sales tax, requires people who earn less to pay a greater portion
of their income than do people who earn more. Arguments can be
made for each of the three types of taxes.

REVIEW TERMS AND CONCEPTS

Write the letter of the term that matches each definition. Some terms will
not be used.
a. assessed valuation 1. Setting different prices for different customers
b. bankruptcy 2. Advertising that is misleading in some important way
c. excise tax 3. Legal process that allows the selling of assets to pay off debts
d. false advertising 4. Distinguishing name, symbol, or special mark placed on a good or
e. information liability service that is legally reserved for the sole use of the owner
f. interstate commerce 5. Responsibility for physical or economic injury arising from incorrect
g. intrastate commerce data or wrongful use of data
h. personal property tax 6. Regulating which land areas may be used for homes and which may
i. price discrimination be used for different types of businesses
j. proportional tax 7. Tax rate that remains the same regardless of the income
(flat tax)
k. public franchise 8. Tax that applies only to selected goods or services, such as cigarettes
l. sales tax and gasoline
m. trademark 9. Business transacted within a state
n. zoning 10. Tax levied on retail price of goods and services when they are sold
11. Tax on movable possessions
12. Value of property determined by tax officials

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