Das Racist — Combination Pizza Hut And Taco Bell

If you haven’t driven by YUM!’s combination stores, they are a site to see. A family of picky eaters can stop by a location and grab a combination (depending on the pairings) of pizza, tacos, fried chicken, fish, or burgers. The combination of stores varies depending on the area, and some even have three-in-one:

pizza hut taco bell kfc

This song (and accompanying picture) can serves a great introduction to the concepts of product differentiation and economies of scope. The YUM! brands have a large presence in major categories in the fast food market:

4. KFC —  20,404 locations
7. Pizza Hutt — 13,728
11. Taco Bell — 6,500

Thanks to Rob Szarka for the recommendation.

CBS Boston — Avoiding Price Discrimination

 

This CBS clip details ways families can avoid being subjected to price discrimination tactics by firm. CBS affiliates across the country started searching for different items around the country to see how varied the prices were. While customers may prefer to pay the same price (an argument for equity), firms can actually improve efficiency by practicing price discrimination.

Life in Pieces — Unbundling the Shoes

 

At their family garage sale, John tries to sell a pair of shoes as separate items. By unbundling the items, he offers one shoe for 50 cents, but the second shoe as $10. He almost gets tricked when the shopped is buying the shoes for her husband who only has one leg, but John tries to quickly back-peddle. This form of price discrimination is the opposite of a bulk discount.

The Toys That Made Us — Two Part Tariffs for Barbie

 

When designing the pricing model of Barbies, Mattel looked to Gillette’s pricing model for razors and razorblades, which is a form of second degree price discrimination that utilizes two part tariffs as a way of maximizing profit from group buyers. The doll (or razors) are sold at very low prices, but the accessories (or razor blades) are the main drivers of profit for the firm. This model allows the company to sell a lot of base products at near marginal cost, but then charge high prices for the accessories, which are a critical component of the overall product.

South Park — White People Flipping Houses

 

Randy Marsh is a local contractor who flips homes in the area. His TV show, white people flipping homes, has come under bad wrap when local Confederates have decided to use his television show to protest the Amazon Echo stealing jobs in the town. Marsh takes the men to court for damages because viewers negatively associate the local Confederates with the show. He’s asked why he doesn’t change the name of his show, but he lists off a variety of other show titles that were already taken. In a monopolistically competitive market, product differentiation is essential to creating demand. Items must be substitutable, but sellers also must try to convince buyers that their product is somehow unique from the competition.

Girlboss — Jacket Arbitrage

 

 

Sophia browses for clothes in a vintage clothing store and finds a jacket she wants to purchase. She bargains for a lower price for the jacket before leaving the store. Later, Sophia decides to sell the jacket on eBay and takes a few photos to try and make the jacket appear more fashionable. While she was able to buy the jacket for only $9, Sophia eventually sells the jacket on eBay for over $600 (the clip stops at $185).   As the show progresses, Sophia continues to sell clothes and starts an online business called Nasty Gal, which is actually still in operation today. This clip is a prime example of arbitrage, where a person can purchase an item at a low price in one area (Sophia at the thrift store) and sell it for a higher price in a different market (Sophia on eBay). In a perfectly competitive market, the price differential should narrow, but because eBay has a much larger customer base, Sophia is able to buy items from the local thrift store and resell them later at a higher price.

Thanks to Elena Montenegro for the clip suggestion!

Saturday Night Life — Toys ‘R Us

When teaching students about the different types of firm structures, we always discuss monopolistic competition and how firms try to differentiate their products to get positive economic profits. This short clip shows how Toys R Us is staying open for 87 hours straight to differentiate itself from other toy stores around the holiday season.

Thanks to James Tierney for the clip and description.

Jurassic Park — Coupon Day at the Park

This clip has both the idea of an inelastic good and the idea of price discrimination. I suggest using it when teaching elasticity and then also using it when you teach price discrimination and talk about how they connect!

Here’s the page from the book.

Thanks to James Tierney for the clip and description!

Superior Donuts — Food Truck Competition

A new food truck sets up shop outside the donut store. The clip starts with the new owner coming by and asking how long the shop has been in business and what kind of customers stop by. She quickly realizes that she can setup shop and steal some of the existing customers. This clip does a really good job showing how monopolistically competitive markets function and that even though an imperfect substitute enters the market, the demand for one business decreases.

 

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