The Parks Department is holding a garage sale to help raise funds for Jerry’s medical bills. The scene starts with April and Andy trying to decide the appropriate price for a hat that has sentimental value for Andy. Later, Tom tries selling a coat he had paid $150 dollars for. Tom marks the coat up to $200 because he put a scorpion on the back of it, but the customer doesn’t seem to think that’s an appropriate price for this venue.
See more: costs, inputs Prices, prices, subjective value, value, value added, willingness to buy, willingness to sell
Tom’s Bistro’s soft opening didn’t go well, so he thinks it’s time to quit. Even though Ron recommends sticking it out, Tom is phased by the sunk cost fallacy; he loves quitting! April comes to the rescue and convinces him to at least try a full opening.
See more: behavioral, costs, entrepreneurship, firm decisions, production, sunk costs, variable costs
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
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
Andy and April are throwing a Halloween party at their house and start listing off all the things they need to throw a great party. The output is a great party and the inputs are a variety of different items.
See more: complements, inputs, outputs, preferences, production function, utility
Ben and Chris come into town from Indianapolis to help cut the town’s budget because of their pending financial situation. Ben suggests firing Leslie to relieve some of the spending associated with the inflated budget, but Ron describes how valuable Leslie is to the department and how she’s worth her salary. He basically argues that her marginal productivity vastly exceeds her salary despite making the second largest salary in the department.
See more: derived demand, government shutdown, government spending, marginal product, marginal revenue product, total wage bill, types of income, value
Ron describes his promotion to manager of a sheet metal factory at the age of 9, but regrets that child labor laws are now ruining this country. Child labor laws a good example of decreasing in supply of labor for the early 1900s and a service as a good discussion on the role of government.
See more: child labor, efficiency, equity, externalities, labor, minimum wage, regulation, safety regulations, social costs, supply shifts, sweatshops