ECONOMICS STUDY GUIDE

27 RIGHTS AND RESPONSIBILITIES

"For every right there is a responsibility, and every responsibility requires a commitment."

Many rights, privileges, and responsibilities that are enjoyed by American citizens can be traced back to the time when the first settlers came to this country.

For this reason, it is important to review the previous material.

Most of the laws and rights of producers and consumers evolved from the interaction between these two segments of society.

A solid foundation in business organization and management may help you as a student better understand rights and responsibilities.

With the growth of business and business enterprise came problems and responsibilities.

The development of these rights and responsibilities brought about legal issues and laws that outline what is expected from producers and consumers.

These legal issues also addressed the consequences for producers and consumers if the laws were not obeyed.

For instance, some of the basic items in the U. S. Constitution guarantee the personal freedoms of individuals.

The Bill of Rights are the first ten Amendments to the U. S. Constitution.

The First Amendment guarantees individuals the right to free speech, the right to assemble, freedom of religion, and freedom of the press.

As the country and businesses grew, laws were introduced to protect both the consumer and the producer.

Among other things, the consumer was protected against fraudulent advertising and selling practices and the producer was protected from the consumer.

The development of these laws brought about two legal terms that became widely used.

When it became apparent that consumers must be responsible for being well-educated about products that they wish to purchase, the term CAVEAT EMPTOR was developed.

This term means "let the buyer beware."

CAVEAT EMPTOR is a warning to consumers to encourage them to use caution and think about a sales deal before purchasing a product.

They should ask questions and do whatever research is necessary to satisfy them before a transaction occurs.

For example, if John Doe buys a computer that was built in 1980, he should beware that the computer may be too old to perform the functions of the modern programs.

At the same time, producers should not take advantage of consumers, nor should consumers take advantage of producers.

The term CAVEAT VENDOR means "let the seller beware."

For example, Department Store A cannot sell a hair dryer to Sue Brown if it is improperly wired or contains hazardous material.

The producer, Department Store A, is responsible to make sure that they sell a safe product to the consumer.

With so much being sold via telemarketing or home salesmen, there are new laws being introduced to protect the consumer.

For instance, if an individual buys something in their home or by telephone, they have a period of time - usually 48 hours - to cancel the deal with no penalties.

This protects the individual who might have been taken advantage of or unduly persuaded to make a purchase.

As citizens, we also have the right to own property.

However, if the state or federal government needs our property, all or part, for a public benefit, we may have to sell it to them at a fair market price.

This can happen when roads need to be widened, highways need to be built across the country, or public utilities must cross private property.

The protection of private property is included in the 5th Amendment to the U. S. Constitution which is part of the Bill of Rights.

Amendment 5

No person...shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

As a consumer, each individual is responsible to be as informed as possible. Read, inquire, talk to people, and do not be afraid to ask questions.

If in doubt, call one of the agencies in your location.

A question about a business should be addressed to the Better Business Bureau, the State Corporation Commission, or the State Attorney General.

Medical questions should be referred to the American Medical Association.

Real estate questions should be addressed to the State Board of Realtors.

Each of these agencies was established partially to assist with questions or problems in their own areas.

Marketing involves the entire selling process. One large segment of this process is advertising.

To be able to use a picture, jingle, trademark, etc., a company must apply for a patent or copyright protection to make sure they are not plagiarizing someone else. The idea, picture, etc. must be original. The U. S. Patent Office is the agency that protects the producer and the consumer in this area.

A copyright is a legal right to a written work - text, lyrics to a song, tune, or software.

When an original piece of written work, whether it be lyrics to a song, software, book or story, etc., is accepted as original work, a copyright is granted to the author.

This means that no other person or persons can copy (in part or in entirety) the work and use or sell it as their own.

The original work is kept on file in Washington, D. C. Plagiarism carries a severe penalty.

In recent years, copyrights and infringement of computer software programs have become a problem.

There are significant penalties for pirating or copying software without permission, or without buying it. These laws protect the originator of the product.

As an individual, be sure that pictures, graphs, charts, etc. that are used for personal projects are not presented as your own.

These items are protected under trademark and copyright laws.

When an individual or company designs a new product, they apply to the U.S. Patent Office in Washington, D. C. for the right to the design.

If there are no designs previously submitted which are similar and have already been patented, a patent is issued.

No one can copy or duplicate the product without suffering a severe penalty.

Marketers are responsible for their advertising.

They cannot falsely advertise.

They must make sure that their claims about their products are true and that the item they are advertising actually exists.

The advertising of a product is an attempt to increase the profits for a business.

As you know, the main goal of business in a free enterprise economy is to earn a profit. What keeps businesses from raising prices to high levels in order to make a larger profit?

First, when prices are raised, the consumers buy less.

However, competition provides an important check on profit. Competition also brings about efficiency.

Competition is an important force in a free enterprise economy.

A large part of this competition grows out of the economic freedom enjoyed by citizens in this system.

This freedom makes it possible for individuals to enter business and to compete for profits with other entrepreneurs.

Benefits from competition extend to all persons in the economy.

Usually, competition describes the efforts undertaken by businesses to attract customers away from other businesses.

Because competition is an important part of the economy, the government takes steps to maintain it.

Antitrust laws are one way in which the federal government acts to preserve competition.

These laws are designed to maintain competition by outlawing monopolies and monopoly power.

Competition encourages businesses to be efficient in their use of resources.

Through competition, businesses are encouraged to keep prices as low as possible.

These efforts lead producers to innovate and to invest.

Competition among businesses can take many forms.

Price competition is only one area of competition.

Businesses also undertake what is called nonprice competition.

One method of nonprice competition involves product improvement.

Businesses compete by changing their products to offer something new and attractive to consumers.

Advertising is another form of nonprice competition.

Advertising is designed to persuade consumers to buy certain products.

Businesses also try to outdo their competitors by offering more services to their customers.

Advertising is the key to the creation of a demand for a product or service.

Many people tend to spend beyond the amount of money or scarce resources they have available for disposable income.

Disposable income is the amount of income individuals have left to spend and save after they have deducted their basic needs and personal taxes.

Spending beyond the amount of disposable income that is available is called conspicuous consumption.

Conspicuous consumption is the purchase and use of goods and services primarily for enhancing one's social prestige rather than for the satisfaction of material needs.

Do you remember in an earlier lesson when you determined why you had purchased the clothes you had worn to school?

What had motivated you to buy these clothes?

There is a need for the advertising industry, as for many other segments of our economy, to evaluate its code of ethics.

The government has already taken steps to control certain types of advertisements through the Food and Drug Administration.

In an economy where more than half of consumer purchases are for things not necessary for survival, creation of demand through advertising may be an important means of keeping business on an even level.

There is little likelihood of a decline in the importance of advertising.

There is a need for the advertising industry, as for many other segments of our economy, to evaluate its code of ethics.

The government has already taken steps to control certain types of advertisements through the Food and Drug Administration.

In an economy where more than half of consumer purchases are for things not necessary for survival, creation of demand through advertising may be an important means of keeping business on an even level.

There is little likelihood of a decline in the importance of advertising.

Summary

This concludes our discussion of the rights and responsibilities of producers and consumers.