In Pretty Woman, Edward is really interested Vivian and makes a business proposition for her to spend a week with him. He offers to hire her as his companion. During the negotiation process, they attempt to settle on a price. They agree on a price of $3000, but at the end of the clip she admits to Edward that she would have stayed for $2000 (implying she has now earned $1000 of producer surplus), but Edward reveals he would have actually paid her $4000 (implying his consumer surplus is also $1000).
John Stossel — Price Gouging
Is price gouging evil or is it the sensible economic decision when shortages arise? In this series, John Stossel explores price gouging around natural disasters. This topic is really good for discussing the tradeoff between equity and efficiency.
Frozen — Big Summer Blowout
The local shop owner is having a big summer blowout sale and prices are low! The problem is that in this magical world, summer items aren’t exactly in high demand.
Thanks to Christine Cai for the clip!
Rihanna Tap Water
Would you buy tap water if it was marketed by Rihanna? This comedy clip works as a great introduction to the idea of product differentiation and marketing. It can also be used to talk about why a celebrity would endorse a product and the signalling value of hiring those celebrities.
Credit: Michael Coon
Pixar — One Man Band
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.
West Wing — Post Hoc Ergo Propter Hoc
One of the most common fallacies that people fall victim to is the post hoc ergo propter hoc fallacy. Simply put, don’t simply assume that because one thing follows another, the first thing caused the second thing to happen.
Adam Ruins Everything — Trophy Hunting
Some markets fail because of the lack of property rights, but trophy hunting could actually be used to alleviate some of those issues by assigning property rights to game wardens and then selling licenses for the right to hunt the animals. The funding from the licenses could then be used to help maintain the population. We don’t think Adam ruined anything here.
Big thanks to Kalina Staub for sharing this one with us!
Adam Ruins Everything — Gift Giving
Adam does a great job working through the inefficiency of gift giving because of how people value different items.
The Economist — How Immigrants Can Save Dying Cities
The Economist outlines the impact that immigrants (particularly young ones) could have profound impacts cities that struggle with revitalization. If you’re looking for a book that details many of the arguments made in this video, I highly recommend Moretti’s New Geography of Jobs.
Chicago Booth Review — Video Killed the Radio Star
Erik Hurst, an economist with the University of Chicago, delivered an interesting commencement address that focused on the role of video games in the supply decisions of young men. While a bit more academic than some other commencement addresses, it sets the stage for a nice discussion on the increasing value of leisure.