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
When the NBA goes on strike, Entertainment 7Twenty (Tom and Jean-Ralphio’s company) hires Indiana Pacer Roy Hibbert to play one-on-one basketball at the office for 75% of his salary. When worker’s aren’t able to go to work, their next best alternative is lower than their original wage. This allows interested firms to get labor a discount.
See more: labor, next best alternative, opportunity costs, reservation wage, strikes, unions
Ron is getting audited, so the Parks Department helps him look through receipts to help him. Ron doesn’t believe in banks, so he potentially stores his money around town in the form of gold buried around town.
See more: banks, gold, gold standard, liquidity, medium of exchange, money, money leakages, money supply, store of value
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
Ron describes a gentleman’s agreement he made with a man to build a dining table in exchange for a 60 feet of copper pipe and a half pig. The barter system is inefficient because of how hard it is to properly measure the trades.
See more: barter system, gains from trade, medium of exchange, store of value, transactions
A young student needs to interview someone for a school project and stumbles upon Ron in the office. Her project is supposed to focus on the role of government in society, which gives Ron the opportunity to share his libertarian views about the government’s purpose. After describing these views, the young student’s parent comes back very unhappy.
See more: efficiency, equity, fairness, role of government, taxes
Ron won’t endorse a product unless he uses it exclusively and actually believe in it. Firms in imperfect markets often use celebrity advertising because it serves as a signal that the person selling the product actually believes in the product.
See more: advertising, monopolistic competition, product differentiation
Leslie lists the most important things in life: friends, waffles, and work. She has trouble ranking friends and waffles, but she knows work is third. Transitivity is an important component of utility maximization.
See more: preferences, transitivity, utility
Economics of Parks & Recreation 