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CH 1] Business 101 1-11

but in a regulated monopoly, pricing is subject to rules imposed by the regulatory
agencies. There are few directly competitive products in a regulated monopoly, and
entry into the industry is restricted by the government. In fact, in some states, a 1
public utility must periodically seek voter approval to continue its service. Table 1.1
presents the features of each type of competition.

An Economic History of the United States
The United States has a fascinating history and it should not be ignored.
Business significantly influenced customs, politics, and even family living. The
historical development of the U.S. economy continues to affect business operations.

In the Beginning: Colonial Society
Colonial society was primarily agricultural, built on the products of its farms
and plantations. The young nation's prosperity depended on the success of its crops,
and most people lived in rural areas. The cities—small in comparison to those of
Europe—were the marketplaces and residences for craftsmen, artisans, traders, Economies of scale are cost
bankers, and government officials. advantages reaped by companies
when production becomes
The real economic and political power of the nation was centered in rural areas. efficient. Companies can achieve
An agrarian populace is tied to the land socially and economically. The colonies economies of scale by increasing
looked to England for manufactured products because of laws enacted in England production and lowering costs.
that protected English manufacturing, and the capital with which to finance infant This happens because costs are
industries. spread over a larger number of
Even after the Revolutionary War (1776-1783), the United States maintained goods. Costs can be both fixed
and variable. The average cost of
close economic relations with England. British investors provided much of the a product is less when purchased
money needed to finance our developing business system. This financial influence in large quantities than when
continued well into the nineteenth century. purchased individually.

Now we’re moving: The Industrial Revolution
The Industrial Revolution began in England around 1750. The traditional
manufacturing system of independent skilled workers individually pursuing their
specialties were replaced by a factory system of mass-produced items by bringing
together large numbers of semiskilled workers.
The factory system profited from reduced production costs created by large-
scale production, an economy of scale. For example, raw materials (as an input) are
less expensive per unit when purchased in large quantities than when purchased in
small quantities. Another savings came from the specialization of labor; each
worker concentrated on one specific task or job. Production efficiency improved
substantially, and the factory system revolutionized business.
Influenced by the events occurring in England, the United States soon began its

Union Pacific Lands in Nebraska
3,000,000 acres.

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