This clip is a great one for the first week of a principles course and can be used to teach a variety of concepts including opportunity costs, marginal analysis, and incentives. Farva isn’t the smartest police officer on the force, and he’s an even worse economist. The gas station offers a “free” hot dog for people who pump 10 gallons of gas, but Farva only needs 9 gallons to fill his car. He has to make a decision on the margin about whether he wants to get that extra gallon. He weighs the costs and benefits of the extra gallon to determine if the “free” hot dog is worth the cost of 1 gallon of gas. Ultimately, the hot dog cost his 1 gallon of gas.
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