Category: Cost and Production

The Santa Clause — Technological Improvement

Even Santa and his sleigh can use some upgrades once the new technology has been developed. Technological improvements allow companies to produce more products using the same resources or to continue providing the same level of output more efficiently. Charlie and the elves help Santa improve his gift-giving efficiency by upgrading his suit and improving the features of his sleigh.

Thanks to Mandy Mandzik for the clip recommendation. Check out her working paper, All I Want for Christmas is an A on My Econ Final: A Holiday-Themed Review Class, for more Christmas-themed economics examples.

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The Witcher — Diminishing Returns

Ciri is in the middle of training while Geralt repairs his armor. She struggles with her technique and becomes frustrated that she isn’t executing as she expects. Geralt calls it for the day and notes that any more training will just suffer from diminishing returns. The implication is that she can keep training, but that each additional amount of time allocated toward training would yield smaller gains to her ability. Ciri would be better off focusing on rest instead.

Thanks to @EconWoodrow for the find!

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Moana — How Far I’ll Go

Moana laments about how she wants to travel the sea, but her father wants her to stay behind and help her village. Moana wants to travel, but she can’t do it on her own. In order to travel the sea, she requires a variety of inputs like her boat and the wind in her sail. In order to build the boat, she needs wood from the trees on the island, but also some human capital associated with how to build a boat that won’t sink. All of our decisions, and any production that occurs on the island, requires resources. The main resource on this particular island is people’s labor, as they produce a variety of items to ensure society remains intact. As Moana says, “everyone knows their role on this island.”

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Kitchen Nightmares – Marginal Touches

Chef Ramsey stops at a Scottish restaurant to help a struggling chef. What he finds is a restaurant where each employee makes a marginal change to the dish before it is sent on its way. A single dish may be modified by 7 different people, but it isn’t clear exactly how much of a contribution each is making. While each may add some benefit with their labor, the additional cost of waiting to send the dish out (and the cost of such a large staff) is part of the reason Chef Ramsey is there to help. The labor costs of the restaurant are $4,500 each week, but they aren’t even breaking even.

Thanks to Alex Marsella for the clip suggestion!

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The Simpsons — Grease Business

When Homer finds out from Apu that there is a local business buying old grease, Homer sets out to be rich. He buys $30 worth of bacon, feeding it to the dog, in order to harvest the extra grease and sell it. He spends hours frying up bacon only to earn 68 cents. He doesn’t seem bothered by his losses since his wife (Marge) paid for it. There’s one problem Homer hasn’t realized yet; Marge gets her money from Homer.

Thanks to Alex Marsella for the clip suggestion and summary!

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Brooklyn 99 — Moneyball

Captain Holt and Lieutenant Jeffords want to streamline the department and improve efficiency across the precinct. Jeffords is concerned that Capt. Holt is getting to greedy and can’t make many more improvements, but Capt. Holt believes he’s taking a Moneyball approach to the department. The film is his favorite and he finds the statistical analysis beautiful.

While he may be improving efficiency through his new statistical approach, the two should be concerned about diminishing returns. Productivity can increase with revised strategies, but additional productivity may require a significant increase in cost. In order to determine the optimal outcome, the two should focus on marginal analysis.

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Zootopia — Barriers to Entry

In this particular scene from Zootopia, Nick Wilde and Finnick buy a large popsicle to eventually meltdown and reform into small “Pawpsicles” to sell to other animals. This scene can be used when teaching barriers to entry since the popsicle market appears to have very few barriers. The two of them are able to access all the necessary ingredients and can setup their businesses outside the bank easily.

Thanks to Bryn Goldman for the clip suggestion!

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Family Ties — Turtle Business

Alex Keaton talks to pre-schoolers about starting a business and taxes. It is a fun clip to show when introducing a discussion about taxes. To avoid any issues with political differences, I usually note beforehand that Michael J. Fox, who plays Alex, was a Democrat in real life but played a Republican on the show.

Thanks to Matt Rousu for the clip and description!

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Hot Ones — Gordon Ramsey

 

On Hot Ones, celebrity guests are interviewed while eating progressively spicier wings. In Season 8, Episode 1, Gordon Ramsey discusses the makings of a $25 hamburger as well as the costs that are often “hidden” from the customer. This is a fun, and relevant way, to introduce concepts like labor and rent to students who are unfamiliar with the costs of running a business. Toward the end, Ramsey discusses the notion of excess capacity, whereby firms are not necessarily producing at minimum average total cost. If firms can fill the excess capacity (perhaps through price discrimination), they may become efficient.

A big thank you to my student, Abdullah Al Otaibi, for sending me this clip!

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Superstore — Handheld Automation

Corporate has created new devices for customers to use that will allow them to look up where items are located in the store, scan the items, and pay for their total. The employees quickly point out that the device essentially replaces the workers and they are left wondering what that means for them. Dina tries to point out the relationship between ATMs and bank tellers, although she doesn’t have it exactly right.

At the end of the clip, Amy points out that corporate has also asked the stores to cut back employee hours, which implies that the new machines are replacing some of the labor in the store.

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