Categories
Labor Principles

Outsourcing a Task

There’s a big mess in the backroom, but Mateo is on the phone trying to secure Celine Dion tickets. Garret tries to recommend hiring someone from an app to wait in line for Mateo, but Mateo reverses it and suggests that the two of them hire someone to clean the mess for them. They are outsourcing their jobs to someone who is willing to do the job for less while they focus on the things they want to do.

Categories
Principles

Opportunity Cost of a Wedding

Carol wants to go to Sandra’s wedding, but Sandra doesn’t want her there. Garrett and Dina tried to tell Carol that she wasn’t invited, but that didn’t work. They approach Sandra with a different idea, offer Carol a better alternative than Sandra’s wedding so that Carol would hate missing the alternative. The three of them attempt to increase the opportunity cost of going to Sandra’s wedding, first by offering tickets to a Whitney Houston concert on the same day.

Categories
Consumer Choice & Behavioral

Opportunity Cost of Divorce

Jerusha and Glenn are over for a party that Amy is hosting and Jerusha takes the time to console Amy on her recent divorce. Jerusha actually points out the sunk cost fallacy and praises Amy for her divorce since it’s better than staying in a marriage that doesn’t make you happy. A classic sunk cost fallacy example is often relationships where one party is unwilling to break up the relationship because of the amount of time they have spent together.

Categories
Labor Unemployment

Reconsidering Layoffs

The Cloud 9 corporate office has told Glenn that he needs to layoff 10% of his staff, but Glenn tries to have Jeff reconsider by inviting him to Cheyenne and Bo’s wedding. He tells Jeff that Cheyenne is severely uneducated, and her job is the only thing standing in the way between her and prostitution. He introduces Jeff to other employees that he notes are right on the poverty line. By having Jeff meet the employees that may be laid off, Glenn is trying to make the opportunity cost more tangible.

Categories
Labor Principles

Does Jonah Want to go Back to School?

An old college friend of Jonah’s now works at the corporate office for Cloud 9. When he comes to visit, he shows the other employees a video of Jonah doing a presentation, and then brings up the fact that Jonah’s enrollment is still active. Jonah initially quit college because he wasn’t happy there, but he’s not sure if he ever wants to go back.

Categories
Labor

Santa Reservation Wages

Glenn announces a winner of the search for the store’s new Santa position. When the winner asks about the salary, Glenn tells him that he will be paid in smiles and wonder and so many other things. The winner quits, along with almost everyone else. There is one person who stays: an employee of the store.

Categories
Labor Principles

Incentive to Quit

The employees are in a betting pool to see which temporary employee will quit first. For each temporary employee, the original employees are trying to make the work experience less enjoyable than the alternative option of quitting. By doing this, they are increasing the opportunity cost of continuing to work. Their tactics range from emotional stress, manual labor, sexual harassment, and increasing the risk of injury.

Categories
Principles

Lack of Interest in Exercising

Garrett announces that there will be a 40% reduction in the price of exercise gear because the store is closing that section due to a lack of interest. If people aren’t buying the products on the shelves, Cloud 9’s opportunity cost may be high enough to encourage them to remove that section and replace it with a more profitable item. The price reduction should increase the quantity demanded for the exercise gear.

Categories
Consumer Choice & Behavioral Principles Supply & Demand

Consumption vs. Savings

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.

Categories
Consumer Choice & Behavioral

A Party Without Clowns

Glenn and Dina have differing opinions about what should be included in the pizza party they are planning for the winning team. Glenn stresses that the budget is only $60, but Dina really wants a piñata. Glenn, on the other hand, really wants a clown at the party, but Dina doesn’t believe that’s necessary. This scene is a good introduction to the concept of budget constraints, optimization, and tradeoffs. Since Glenn and Dina have different utility functions, their willingness to purchase different items isn’t compatible.