Author: Jadrian Wooten

Economics eductor. Follow me @Wootenomics

Categories
Market Structures Supply & Demand

Wedding Premium

Garret notices that the store sells two dresses that look identical, but one is marketed as a white dress and the other is a white wedding dress. The wedding dress costs $200, but the other dress only costs $30. The wedding industry is notorious for high markups on products that are labeled for weddings because brides and grooms often have fairly inelastic demand for their products. Because of this inelastic demand, firms are able to price discriminate and charge higher prices.

Categories
Labor Principles

Shirking at a Gun Range

On the hunt for a runaway friend, Amy and Dina take some time to hang out and get to know each other better. Right as they’re deciding to head back to work, Amy suggests they treat themselves a bit. Even though the store manager believes they’re away from the store searching for a friend, Dina and Amy are actually shirking

Categories
Market Structures

Cornering the Market for Gay Weddings

Glenn is embarrassed about how he handled a gay couple earlier in the episode and he seeks Mateo’s help in trying to differentiate their product offering by providing a section tailored to gay weddings. Even though Mateo points out that it’s the same as s straight wedding, Glenn is convinced they should setup a section specific to gay weddings. Product differentiation is a characteristic of monopolistically competitive firms. By offering a specific section of the store to one group of people, Cloud 9 can set themselves apart from other retailers.

Categories
Supply & Demand

Unnecessary Bean Hopper

In order to win the Color Wars, teams have to sell as much as they can. Jonah doesn’t feel comfortable with the premise of this competition, even when the customers explicitly state that money isn’t a consideration in their purchase decisions. The coffee maker with the built-in bean hopper isn’t really necessary (which Jonah points out), but the customer is displaying some conspicuous consumption behavior.

Categories
Supply & Demand

Talked Into Buying a Grill

Jonah convinces Adam (Amy’s husband) to buy a new grill even though the couple doesn’t really need it. Earlier in the episode, Amy convinced Jonah to start selling stuff to people even if they don’t need it so they can win the store’s Color Wars. Adam and Amy don’t really have the savings to afford such a lavish purchase, but Jonah emphasizes how great the grill would be for Adam’s YouTube channel.

Categories
Labor Principles

Pizza Party as an Incentive

Each year the store participates in a competition that divides the employees between two teams to see which team can sell the most during the day. Glenn announces that the winning team will receive a pizza party. While the employees aren’t overly happy about either the competition or the pizza party, incentives can usually be a way to induce higher levels of productivity. It turns out that each team member on the winning team also receives $100, but Glenn was saving it as a surprise incentive. Amy has to explain to Glenn that incentives need to be announced at the beginning in order for them to actually work.

Categories
Market Structures

You Never See That

Adam has a YouTube channel where he shows people how to cook, but how does he differentiate himself from all of the other YouTube shows out there? His episodes are done in real time, which means that while his ribs are cooking for 2 hours, he just stands there and waits. He hates when shows just cut to the end and the meat is fully cooked. Jonah and Adam both remark that they never see that online, which implies that’s probably not really a feature people want.

Categories
Growth Labor

Investing in College Classes

Jonah has convinced Adam to buy a new grill and a new TV, but he didn’t know that Adam was married to Amy. Part of the reason he convinced Adam to purchase these items was so that his team could win the Color Wars and Amy could get a $100 bonus. While Amy and Adam are fighting, we learn that Adam is a serial entrepreneur and Amy invests in her human capital.

This scene is a good example of the tradeoffs associated with investing in human capital and physical capital. Adam wants to invest the money to support his business ideas, but Amy believes that investing in her college classes is better because it can lead to more money later.

Categories
Supply & Demand

Get the Better Bike

Garret is in the process of convincing a customer to purchase a more expensive bike, the Vilano Forza, but the customer wants the cheaper RX-5 bike. Price isn’t the only determinant of a consumer’s utility function and Garret tries to convince the customer that the other features of the bike are worth the price. To end the scene, Garret also tries to get the customer to buy a bicycle helmet, which is a good example of a complementary good.

Categories
Labor

Buying a New TV

Adam and Jonah are watching Adam’s YouTube channel on one of the TVs in the store, but Jonah will use this as an opportunity to try and sell Adam a new TV. In order to win the Color Wars, employees are trying to sell expensive items to increase their team’s total. Jonah doesn’t know that Adam is married to Amy and begins to insult her in an attempt to get Adam to purchase the TV. Adam makes some key comments that connect with the economics of the household, namely that his and Amy’s happiness is linked. He’s careful to consider Amy’s happiness before making purchases, because their utility functions are interdependent.