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.
The gang heads to get some pizza and Fry wants his friends to experience anchovies, a type of small, salted fish. It turns out that these small fish were overfished and the population collapsed. Zoidberg even mentions how sorry he was that his people kept consuming them because they didn’t realize they were a common resource, subject to the tragedy of the commons.
Fry is incredibly rich, and wishes he could bring them back. He at first notes that even incredibly wealthy people aren’t able to purchase everything. At an auction, he finds that there is exactly one can left in the known universe and decides to bid all of his money for the “can of old fish”
While we normally wouldn’t pass judgement on someone’s preferences, it’s hard not to believe that this could a good example of a winner’s curse. Fry’s willingness to pay for the can of fish may not be $50 million, but the utility from winning the auction could be worth that.
Thanks to Jessica Pritchardfor the clip suggestion!
The Roses are trying to buy a last-minute Christmas tree, but they’ve come to realize their options are limited. The shop owner knows demand has recently been higher because there aren’t a lot of trees available in the store. Raymond finds that the prices are higher than he was expecting and decides to leave.
The shop owner takes a few creative approaches to selling trees, including bundling air fresheners with purchase and offering a discount if people buy two trees. Price discrimination is a popular tool to increase output for a firm and sell products to people across the demand curve.
The digital revolution can replace a lot of items that traditional paper was used for, liking color pages, sticky notes, books, or puzzles, but it can’t replace toilet paper. Substitute goods are at the discretion of the consumers with some items being “perfect substitutes” and others being some gradient of substitutes. Digital toilet paper isn’t a very good substitute for the real stuff.
Russ Roberts spins a tale of a local bread market and wonders about the power of such a market. He hypothesizes the trouble that could occur if one person were given supreme power and became a bread czar. You can read the poem online as well, with commentary!
Popeye’s argues that economics can’t explain why their chicken tastes so good. The professor looks at the inverse relationship between quality and quantity, so maybe this is actually a marketing class?
Travis didn’t hesitate to reach out and suggest this catchy song about two popular snacks that they enjoy eating. The first question that comes to mind is if the two snacks are complements or substitutes for one another, but I wouldn’t be surprised to see a combination bag from Frito-Lay soon.
Joe is trying to find his parents and comes across a Native American selling some fireworks. He naively asks if he can help him track his parents, but Kicking Wing tells him that tracking is a way of the past and he is focused on selling fireworks to help him go to veterinarian school. Amazed, Joe Dirt asks where all the good fireworks are, but Kicking Wing only sells snakes and sparklers because those are the fireworks he sells. Joe explains that Kicking Wing needs to focus on selling fireworks that consumers like if he wants to be successful.
Thanks to James Gordon from Elbert County Comprehensive High School for the clip suggestion and description!
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.