Neighboring city, Eagleton, has decided to build a fence around a small park they used to share with the citizens of Pawnee. Throughout the episode, we learn of various quality-of-life factors that Eagleton excels in relative to Pawnee. Things like obesity, height, income, wealth, and life expectancy are all much higher than in Pawnee, and the citizens of Eagleton want to keep it that way.
See more: inequality, isolationism, life expectancy
Ben and April are in DC while Ben is serving as a congressional intern, but both receive care packages from their significant others while away. Andy is running out of clean clothes and includes this in his most recent care package to April. While Ben’s care packs from Leslie aren’t as strange, April’s includes Andy’s dirty laundry because she is so much better at doing laundry than he is. Andy feel’s April has a comparative advantage in laundry despite being so far apart from each other.
See more: comparative advantage, gains from trade, gift giving, opportunity costs, specialization, trade
Ben’s been offered a job with a local accounting firm, but he isn’t as excited about the commute or the carpeting in the office. Leslie recommends that if he isn’t in love with the idea of working there then he should take some time to consider other options. The non-pecuniary aspects of jobs are important in the decision to accept employment.
See more: compensating differentials, labor, non-pecuniary factors, opportunity costs, types of income, unemployment
Leslie wants to break up with Ben, but she needs to order a bottle of wine before she goes through with it. She let’s the waitress know that she wants wine, but isn’t coy about only selecting the cheapest one because she can’t tell the difference. There’s a long line of literature on the effects of quality and wine prices that shows even professionals can’t often tell the difference between brands.
See more: anchoring, behavioral, preferences, ranking, subjective value, utility maximization
Andy goes to the hospital for a broken nose, but it turns into a rant session for Ben. It turns out the roommate situation between Ben, April, and Andy hasn’t been ideal because Andy and April continue to use his things without his permission. Andy and Ben negotiate for ways to remedy the externality on their own. If property rights are well established (Ben does own his stuff!) then two parties can work out externalities without government intervention.
See more: bargaining, Coase Theorem, common resources, externalities, negative externalities, private costs, private goods, public goods, social benefits, social costs, transaction costs, types of goods
Ben is getting a little tired of Pawnee, but he’s only two stamps away from his “free” meatball sub. Unfortunately, his card is expired. He’s a bit sad about it, but those stamps are essentially a sunk cost. The card itself is a good example of ways that firms price discriminate and offer discounts to bulk shoppers.
See more: free lunch,NSTAFL, opportunity costs, price discrimination, second degree price discrimination, sunk costs
Donna and Tom take Ben on a “Treat Yo Self” day to help him relax, but he just buys socks, which he feels like he needs. Donna and Tom challenge him to think about what he would buy for himself if he could get anything he wanted. Ben decides he wants a Batman costume.
See more: elasticity, income effect, income elastic, luxury goods, necessities, normal goods, preferences, subjective value, utility
Tom recognizes that he can be successful by standing behind successful people and taking partial credit. Free riders often disrupt the efficiency of markets because they receive the benefits without putting in the same level of costs. This rent seeking behavior is apparent in a variety of examples from public service to group projects.
See more: free rider problem, private goods, rent seeking, types of goods
Ben has been asked to help Entertainment 7Twenty manage their finances because their costs are way higher than their revenues. His first suggestion is a downsizing of the building and keeping better financials. Unless the firm starts generating revenue, they only have enough cash for another month of operation.
See more:break even, capital, diseconomies of scale, economies of scale, fixed costs, profit, revenue, variable costs
Ben has been invited to help Entertainment 7Twenty evaluate their financial situation. When Ben asks how the Tom and Jean-Ralphio are making money (generating revenue), the two show him the printing press where they create fake money with their logos on it. This money is only good at their parties and the two are attempting to create a small internal economy.
See more: counterfeit money, Federal Reserve, medium of exchange, money, money supply, printing money, store of value
Economics of Parks & Recreation 