Ann and Chris decide not to buy an engagement ring because they think it is an unnecessary expense when they could do other things with the money. Engagement rings are often considered signals in the dating market that one partner is unavailable. The couple watching the exchange realize they could buy a house instead of buying a ring.
See more: opportunity costs, preferences, signalling, tradeoffs
Dr. Jamm bought a cooktop table from Benihana for $4,000 and thinks it is worth every penny. While Leslie and Chris may not place the same value on the table, Jamm’s subjective value is at least $4000.
See more: consumer surplus, demand, intrinsic value, luxury goods, preferences, status good, subjective value, value, willingness to buy
Ben was fired from public service, but eventually accepted a job at an accounting firm. He’s had a week off in between jobs and decided to spend this free time creating a complex board game called the Cones of Dunshire.
See more: entrepreneurship, funemployment, intertemporal substitution, leisure
Ron’s chair becomes popular after being featured in Bloosh, and Annabelle wants to talk about licensing his designs and scaling up production. Instead of having each handmade by Ron Swanson, they can be mass-produced by foreign labor.
See more: demand shifts, economies of scale, luxury goods, outsourcing, preferences, product differentiation, subjective value
Local restaurants are now offering giant sodas, filled with sugar. The child-sized soda is actually the size of a small child! Leslie proposes a soda tax to cut back on citizen’s consuming the sugary beverages, but a representative of the Pawnee Restaurant Association warns Leslie against doing so. Because this will limit the number of sodas being sold, restaurants may have to layoff up to 100 workers and Leslie will be the one to blame.
See more: deadweight loss, labor, labor demand, layoffs, price controls, taxes, unemployment, unintended consequences
Leslie is accused of stripping people’s personal freedoms, but there are significant benefits to the community. According to Leslie, obesity is down, test scores are up, and raccoon attacks have decreased, but some citizens aren’t happy with the changes. When determining the appropriate level of government regulation, the costs and benefits of each action need to be considered, which is easier said than done.
See more: choice architect, choices, externalities, government regulation, negative externalities, nudge, rational choice, role of government, social benefits, social costs
Tom gets an offer that someone is interested in buying his business. After some though, Tom chooses not to sell his clothing rental business and then finds out that the potential buyer will now try to drive him out of business by setting up across the street. Monopolistic competition allows for easy entry and exit into a market that is profitable and results in a reduction in long term profits. This is also a good example of the Hotelling Model where similar firms setup near each other to split the market.
See more: barriers to entry, demand shifts, duopoly, free lunch, hotelling model, imperfect competition, invisible hand, marketing, mergers, monopolistic competition, NSTAFL, product differentiation, supply shifts, zero profit
The Parks Department lists London and many of them go sightseeing. Ron comes across a novelty postcard that he likes and tries to buy the postcard with American currency, but his money isn’t accepted. Despite the importance of the dollar on a global scale, this currency has little value to the shopkeeper.
See more: fiat money, foreign exchange, medium of exchange, money, store of value, transaction costs, unit of account
Members of the Parks Department goes to London to visit, but Leslie can’t decide which bus tour to take. She has three options, all starting around the same time and needs to pick one. Ron and April aren’t much help. Because time is a scarce resource, Leslie needs to figure out which bus tour will maximize her happiness.
See more: choices, opportunity costs, tradeoffs
Tom incentives the department to come to his club and try his newest drink by threatening to place them on his “done-zo” list. The Parks Department decides to go to the Snake Hole Lounge to try Tom’s new drink, but instead they all have a bit too much and go through the next day feeling terrible. One of the other issues shown in this video is diminishing marginal utility. As the night goes on, each member of the group gets a bit happier, but they eventually peak and see negative returns the next morning.
See more: decreasing utility, diminishing returns, externalities, health economics, negative externalities, negative utility, private benefits, private costs, social benefits, social costs, unintended consequences, utility maximization
Economics of Parks & Recreation 