Cheyenne and Matteo are discussing more things they’d like to buy if they were to win the lottery, but Sandra chimes in let them know about lump sum payments versus annuities. She explains how the two of them wouldn’t actually get the full amount if they take the lump sum payment and how they are forgetting that they’ll be required to pay taxes on the winnings.
Glenn and Jerusha want to have another child, but they need to find a surrogate. Cheyenne mistaken agrees to do it and tries to back out, but her boyfriend is supportive of the decision after learning that they’ll earn $20,000. He decides to spend that money (which he calls infinite money) on a new hot tub. The increase in their income results in an increase in their demand for normal goods. In this case, the hot tub is likely income-elastic.
Mateo came down with an ear infection and his coworkers helped raise funds from store customers. He was secretly able to get some antibiotics so the money that was raised doesn’t need to go to a doctor’s visit. Instead, he considers spending the money on a messenger bag instead of healthcare.
Cloud 9 is rebranding their store product line, moving from Halo Brand to SuperCloud. With the switch, the store has marked the old products down by 80%. Cheyenne wants to buy as much of the old merchandise as she possibly can because of the discount. Glenn tells her she cannot set those items aside during store hours, but she is scared they will be all gone by the time her shift is over. She decides to try and hide the products around the store.
Bo and Cheyenne are shopping for wedding supplies in the store. Bo really wants to buy some laptops so they can smash them during the wedding as a form of entertainment. Amy is shocked because she knows how expensive it is to raise a child and believes that the couple should be saving the money instead of spending it on one day. Amy tricks Bo into playing a game with a price gun so that Bo and Cheyenne can see how expensive a child can be. People struggle to recognize the opportunity costs in their decisions, but Amy has made the cost more salient.
The store is having a one-day wedding sale and the discounts are steep enough that there is a line of women ready to purchase products. The increased purchases represent a change in the quantity demanded for items from the store. Since they didn’t stock enough items, the low prices will result in a shortage and likely an inefficient allocation among the shoppers.
Mateo and Cheyenne discuss what they would do if they won the lottery. The two list a variety of different items they would spend their money on after receiving their income boost. This income adjustment would result in the two of them purchasing normal goods, specifically luxury goods. These purchases are driven by income changes, not by the price of those products.
What would you do if you won the lottery? This clip fits nicely with two different sections of an economics course. The first is how people respond to income increases in terms of purchasing normal goods or luxury goods. For labor economics, this discussion is a good segue to discussion how increases in income decrease the time people devote to work assuming leisure is a normal good.