The Santa Clause — Technological Improvement

Even Santa and his sleigh can use some upgrades once the new technology has been developed. Technological improvements allow companies to produce more products using the same resources or to continue providing the same level of output more efficiently. Charlie and the elves help Santa improve his gift-giving efficiency by upgrading his suit and improving the features of his sleigh.

Thanks to Mandy Mandzik for the clip recommendation. Check out her working paper, All I Want for Christmas is an A on My Econ Final: A Holiday-Themed Review Class, for more Christmas-themed economics examples.

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Christmas with the Kranks — Christmas Tree Demand

The Kranks are (initially) planning to skip Christmas this year, which means their demand for Christmas trees decreases. When their daughter announces that she’ll be back home for Christmas, the Kranks scramble to try and find a tree. Unfortunately for Luther, there aren’t many trees available because it’s so close to the holidays and he ends up paying full price (instead of a discounted price) for a pathetic tree. When decision-makers don’t have much time to make a purchase (like Luther right before Christmas), their demand is fairly inelastic.

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Christmas with the Kranks — Skipping Christmas

With their daughter heading out of town, the Krank family decides to skip Christmas and head on vacation. An opportunity cost is the value of the next best alternative. While their daughter was still at home, the Krank family preferred spending it with their family and celebrating Christmas. After their daughter announces she’ll leave, the Krank family decides to head to the Caribbean.

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Home Improvement — Technological Improvement

Tim decides to customize his lawn mower in order to get more power out of it. By doing so he’s able to mow his lawn much quicker than he previous did. This technological innovation allows him to complete his task much quicker and spend more time on other tasks that need to be completed around the house.

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Home Improvement — Asymmetric Information

Tim decides to hide a blow torch from his co-host, Al, in order to teach a lesson to his young children watching at home. Unfortunately, Al doesn’t know that the blow torch has been hidden and he believes he has lost the item on live television. Asymmetric information occurs when one party has more information than the other party in a transaction. When one party has more information, they are better able to make decisions and make take advantage of the unknowing party.

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