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EconGovTest#1StudyGuide - Capitalism an economic system...

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Capitalism - an economic system where there is private ownership of the factors of production (resources) and freely exchangeable property rights for these resources - Freedom to own property - Freedom to trade - Freedom to make contracts Cartel – a group of sellers in a market who try to cooperate(rather than compete) so as to increase their combined total profits Perfect centralized cartel – all firms act as monopolists by agreeing on (Pm) and output rate (Qm) assigning unique quota to members Problems for the cartel - Incentive to cheat - Prisoner’s dilemma - Likelihood of cheating Stigler’s theory of collusion – successful collusion by a profit maximizing cartel depended on its ability to - Detect price cutting…and to - Retaliate against it Joint Venture - two or more firms carry on an activity together that each might otherwise performed by itself Joint venture involving competitors - some joint ventures that involve competitors are harmful to competition while others promote competition Joint venture in network industries – one in which firms are interrelated in a way so that certain joint activities and cooperation are necessary for the market to exist and/or function well. Sherman Act- - makes every contract or conspiracy in unreasonable of commerce illegal - Federal statue to limit cartels and monopoly Clayton Act- - To prevent anticompetitive practices in their incipiency (beginning) - Gave labor certain rights in disputes with management - Declared that “the labor of a human being is not a commondity or article of commerce”
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Treble Damages - An award of damages triple of the amount awarded by the jury and provided for by statute for violation of certain offenses. Injunctive Relief - A court order ussded as a remedy, requiring a person to do, or prohibiting that person from doing, a specific act Equitable Relief - A remedy that is based upon principles of fairness as opposed to rules of law Merger - The aquistition of one company by another, after which the acquired company ceases to exist as an independent entity (unit) Collective Bargaining Agreement - Negotiation between an employer and employee that are mediated by a specified third party Divestiture - The divestment (alienation/to take away) of an interest in a corporation pursuant (agreement) to court order Parens Patriae - Maxim that the government as sovereign is conferred with the duty to act as guardian on behalf of those citizens under legal disability In Pari Delicto - Doctrine that a court will not enforce an illegal contract in an action for losses incurred as a result of the breach of that contract Restraint of Trade – Agreement between entities (individuals), for the purpose of delaying free trade, that results in a monopoly, suppression of competition, or affecting prices.
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EconGovTest#1StudyGuide - Capitalism an economic system...

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