Consumer Choice & Behavioral

Donation Competition

Amy and Jonah are trying to help Mateo with a toy drive inside the store, but there’s a charity event happening outside the store. Amy asks the man to leave since he’s serving as a substitute for Mateo’s charity. A crowd gathers and accuses Cloud 9 of selling products for more than the cost and keeping the profit, i.e. being a profit-maximizing firm. Amy points out that all stores sell things for more than they cost and earn profit.

Market Structures Principles

Discount for Damaged Goods

Cloud 9 won’t sell products that have been damaged, which seems like a good policy. Unfortunately, this means that if an employee wanted to take something, they just have to accidentally damage it. Glenn is frustrated with Cloud 9 and destroys some of the alcohol by marking the bottles with a marker. He declares it party time, sponsored by his family’s old store (Sturgis and Sons) which had been driven out of business when Cloud 9 entered the market.

Market Structures Unemployment

Cloud 9 vs. Sturgis & Sons

Glenn’s family used to own a local hardware store before Cloud 9 entered the market and put them out of business. Cloud 9 was probably able to take advantage of economies of scale and a large distribution network to offer competing products at lower prices. Monopolistic competition in the long run results in zero profits for firms, but if a small company already has relatively little profit before entry, a decrease in demand could result in that particular firm incurring losses and leaving the market. Because Sturgis and Sons specialized in hardware, some of those workers may be structurally unemployed if their skills are no longer needed in the local market. Later in the episode, Glenn finally shares his frustration with Cloud 9 and how they killed his family’s business because of their devotion to profit maximization.