This clip is a great introduction to monopolistic competition. Each performer provides a similar service, but they are not perfect substitutes for one another. When a new competitor enters a market, the demand for the original firms decreases and profits should fall as well.
Paper Moon — Selling Bibles
The young girl performs the role of price determinator in this clip from Paper Moon. The bibles hypothetically cannot be resold because they are inscribed with a name of the deceased. The girl looks around the living room to determine the price that the consumers would be willing (and able) to pay for the bible.
Jingle All The Way: Elasticity of TurboMan
Howard (Arnold Schwarzenegger) tries to get a coveted TurboMan action figure doll the day before Christmas. It’s only the hottest selling toy of the season, so everyone is in a rush to grab this item. Because prices aren’t (initially) adjusting in their usual way, a shortage occurs across the entire city.
A limited shipment of Turbo Man action figures does arrive at one store, which decides to allocate the doll through a lottery system. Whenever there are shortages in markets, there may be a misallocation of consumption, particularly when items are distributed randomly rather than to the consumers with the highest willingness to pay. Even the though the price of the doll increases by 100%, there doesn’t appear to be any change in the quantity that people want to purchase. This would imply that the demand for TurboMan action figures is very inelastic.
The Simpsons: Bart Gets an Elephant
In this clip, Homer decides to monetize Bart’s elephant in order to try and recoup some of the costs of owning the elephant. When he quickly realizes he hasn’t set a high enough price, Homer tries to go back and increase the price, but he may have gone a bit too far.
Parks & Rec: Market Power
I was watching Parks & Rec with a friend one night and came across this great clip that showed market power of monopolies. Ron & Co. originally reserved 22 white vans from the local rental company for Leslie’s campaign. Right before voting day, the rental agency opted to rent the vans to someone else. A negotiation ensues.
30 Rock: Vertical Integration
This is a great (and short) clip to help you teach vertical integration.