Teaching Economics with Media
One of the common shifters of demand is changing tastes/preferences, but that is often taught as something beyond the control of firms. It’s often associated with fads or maybe new research, but firms can also adjust the tastes of their products to induce new preferences. This 60 Minutes segment looks at how companies are changing demand for their products by directly changing the product, or at least the perception of their product.
Thanks to John Kruggle for the submission!
Mateo and Cheyenne discuss what they would do if they won the lottery. The two list a variety of different items they would spend their money on after receiving their income boost. Unfortunately, Sandra tells them about the difference between an annuity and a lump sum payment.
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.
Homer forgets it’s Valentine’s Day so he has to rush off to the Kwik-E-Mart to pick up a last-minute gift. Seeing that Home is desperate, Apu takes the chance to raise the price of a box of chocolates to $100. Despite Homer’s annoyance, he pays the higher price because he knows he’ll be in trouble if he comes back empty-handed. After threatening never to shop there again, Apu offers him a discount on other products to keep him from shopping next door.
This scene is from the movie Christmas with the Kranks involves a specific type of ham that has been sold out and Mrs. Krank needs one because it’s Christmas Eve and her daughter flew in for Christmas. She pays above the sticker price of the ham because it was the last one available in the store. Because there is only one ham left and it doesn’t matter how much the ham costs, Mrs. Krank will buy it. This means that Mrs. Krank’s elasticity for hickory honey ham is very inelastic.
Thanks to Salvatore Pollastro for the summary and the clip!
Guest co-host, Ashanti, mentions that expensive flights during Thanksgiving should be “tapped out” because a lot of people need to be with their families during Thanksgiving. This relates to the concept of demand and supply because the airlines know that when it is close to Thanksgiving, the demand for flights increases, and since most people are eager to be with their families, they are rather inelastic to the price change, so the firms take advantage of this and raise the price of the tickets drastically in order to increase their total revenue.
Thanks for the clip and summary Tammy Georgewill!
Colorful stickers have become de facto currency on the playground. TJ can’t buy things because he doesn’t have any stickers even though his friends have them. Because of the increase in demand, the local shop owner doesn’t even have any stickers left.
TJ decides to start working in order to earn more stickers to buy things. When he gets tired of doing labor for stickers, he turns into a managerial role and begins delegating tasks to other kids who needs stickers. When TJ collects nearly all of the Monstickers on the playground, the kids aren’t able to actually purchase anythings. Eventually, Monstickers become obsolete and the playground converts to Lick ‘n’ Stick Alien Stamps and the Monstickers become useless.
In this clip you see a bar that’s on the South Side of Chicago. The bar is usually dead but very recently “hipsters” discovered the bar. They thought that the snide Russian bartender and expensive drinks made the place different and appealing to them. This bar serves cheap low end alcohol and in the video you can see price discrimination happening. The prices start to change and become higher when the bar serves the hipsters because they are able to pay those high prices versus the people from south side that can’t. The hipsters are also not realizing they are being scammed when the low end vodka is put in a more expensive brand’s bottle.
Thanks for the clip and summary Fiona Brandman!
This is a clip from the movie “The Hudsucker Proxy” (1994). In the scene, the store owner have a hard time selling the Hula Hoop. He kept lower the price but still no one wants to buy the Hula Hoop even he end up giving them for free with any purchase. He then throw all them out of the store and one of them accidentally bump into a boy. The boy start playing with it and the other kids saw it. After that, they all run to the store for the Hula Hoop. As more and more kids tried to buy a Hula Hoop, the price goes up again and even higher than before.
This related to the idea of demand and supply. At first, the Hula Hoop was not popular for kids so there’s no one wants to buy it. However, after the kids saw the boy playing with it, their preference change. Preference can change the demand of a product. When the demand increase, the price of the product and the supply also increase.
Thanks for the clip and summary Yi Chun Liu.
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.