Tom pranked Anne by putting glitter in her laundry detergent and she decides to return the favor by putting glitter in Tom’s moisturizer. She pitches it as a new product gimmick, but Tom supports the idea of this new product, “Sparkle Skin.”
See more: entrepreneurship, monopolistic competition, product differentiation
Entertainment 7Twenty is bankrupt, but Tom doesn’t understand how his company has gotten this far. Tom took the phrase “spend money to make money” a bit too literally and spent all of the money that was invested in the company, including a limousine with a hot tub in it. Unfortunately for Tom, the revenue didn’t follow.
See more: costs, input costs, profit, revenue, variable 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
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
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
While on suspension, Leslie buys her officemates Christmas gifts based on their personalities. Ron mentions how he only gives people $20, but realizes how great Leslie’s gifts are and how the office needs to remedy the gift giving imbalance. While Ron takes the most efficient outcome for gift giving, he’s realizing that there may need to be a bit more thought put into the process.
See more: behavioral, equity, gift giving, preferences, utility
Ron finds a typewriter out by the dumpster, but the noise of the machine bothers everyone in the office. While it makes him happy, he’s not taking into consideration the costs he is imposing on everyone else.
See more: externalities, private benefits, private costs, social benefits, social costs
Now that the Parks Department is temporarily shut down, Tom starts packing up his office items. With the pending layoff, Tom has the option of seeking out a temporary job or becoming an entrepreneur.
See more: entrepreneurship, government shutdown, job search, layoffs, temp jobs, tradeoffs, unemployment
Economics of Parks & Recreation 