Tag: scarcity

Labor

Amy Weighs a Promotion

Post author By Jadrian Wooten
Post date January 5, 2021

After Dina stepped down as assistant manager, the store manager needs to find her replacement. Amy knows she is the likely candidate but declines the offer before Glenn can offer her the position. Her rationale conforms to the income-leisure tradeoff model. Since there is no increase in earnings from the assistant manager position, Amy doesn’t want to spend more of her time away from leisure. The scarcity of time available in her day means she must make tradeoffs on how to spend her time and she would rather spend it on her college classes.

Tags efficiency, effort, incentives, income, income leisure tradeoff, Labor, leisure, scarcity, tradeoffs

Consumer Choice & Behavioral

A Party Without Clowns

Post author By Jadrian Wooten
Post date January 3, 2021

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.

Tags budget constraints, constrained optimization, opportunity costs, optimization, scarcity, tradeoffs